Billion Dollar Day video analysis

I apologize folks, the video is not done yet.

I don't know why I thought part A was done. I was sick with a nasty flu last week and I guess by friday my brain was completely messed up.

So we continue with the analysis until the end of part A

The guys in this video are called inter-dealer brokers i.e. brokers who broker deals between Bank traders. In this case, the broker company is Harlows in the London office, a very seasoned group of brokers.

Those little speaker boxes you see in front of the brokers are linked to interbank traders all over the city (in this case, London) who would leave their bids and offers with these brokers or hit the bids (or take the offers) from these brokers.

And the brokers would rattle off the current running prices, speaking into the microphones, and these prices will be heard by those traders who use their services (virtually everybody) on their own little speaker boxes.

Their "extinction" has been predicted a long time ago in the advent of EBS and other proprietary inter-dealing electronic platforms, but these brokers are still alive and kicking today...

I think I identified the problem.

As highlighted above I was using another video source directly from youtube different than the one embedded in the first post. The version was shorter so I thought "part A" was done.

So we keep analyzing the video embedded on the first post which is 6:05 minutes long.

We stopped around 3:27 min into the video

So @ 3:41 min William Wong is already at his desk turning up the squawk boxes saying good morning etc.

There is 3 computer screens for each trader in Chemical Bank's trading-station set up.

The first, on the right, has some weird symbols ( some look Chinese letters/words) and I would like to highlite again on how cool for them to have touch screens back in 85.

I'm posting a pic below if somebody can come with some explanation for this screen it will help

The second screen ( from right to left) is the quote screen. So far in the video I didn't see one single chart so I would assume that this screen is the most important for William Wong and he trades basically on what he sees in it.

The images are blured because it is a VHS tape but we can see pretty well the quotes back 28 years ago.

Now I don't think this particular screen is the one William is looking at the precise moment the camera cuts.

Take a look at the time, it says

13:44
13:44
13:37
13:37
13:38
13:36
13:43
13:43
13:43
13:43

Those are the times for the quotes from different banks and they are not in "time sequence" but since it is around 8AM Hong Kong local time it tells me that this take was done later and inserted in the editing.

We see later in the video William taking a quick lunch break so I guess the BBC crew used the time his desk was empty to record the screen so thats why we see 11:30 and on.

So don't associate what is happening in "real time" with these quotes for now.

This screen shot will be important later as we reconstruct the parallels between price movement and Williams trades.

Little correction here folks, he has 4 screens in his corner of the workstation.

The important part is that we never see any charts in his screens so it suggest that at least on 06-04-1985 William Wong is trading based on the quotes he sees on the screen from last post.

There's also different names for each row. (other banks?) There's a few different instruments, one looks like usd/spf?, the other is usd/dkk, the third looks like the S&P 500 and the fourth is unreadable. I think the names are quotes from different banks, or quotes that different banks accepted. The prices for each column looks to be pretty much the same, plus or minus 5 pips. Maybe the xx.xxx-xx is the bid-ask? Though, a 20 pips spread...

I wonder what use that information could provide...

Ok, I'm attaching a better screenshot with a transcript, the best I could translate from the blurred video.


so we have the time, the location Hong Kong etc, the name of the bank quoting CIHK could mean Citibank Hong Kong, HSBC is definitely the Swiss bank etc.

than we have 4 pairs. The US swiss frank, US Deutsche Mark, sterling US, and the US yen

I'm spending time on this pic because we will use it later to reconstruct price movement later.

Just for our instruction here American Chemical bank merged with Chase.

Chase merged with JP Morgan recently ( 2000 ) but they kept the name Chase so Williams Bank by the time is now Chase Manhattan.

It is actually the bank I use !

I used to have something similar back in the old days. Each touchscreen box connects to a particular broker in a particular shop. (We sometimes refer to interdealer brokerage houses as "shops"). You press one, it lights up, and the broker on the other side can automatically hear the dealer. The dealer will speak on his mike and ask for the current runs. The broker will reply thru the squawk boxes.

Some shops have individual brokers handling a particular group of client Banks; some will have individual brokers handling particular pairs and service everybody; some may even have brokers handling only one particularly fussy (but lucrative) client.

The FX traders will only be interested on 1 or 2 lines of touchscreen boxes. The other boxes go to brokers handling other trading instruments like money market, FX swaps, government bonds, IRS, etc etc... FX is not the only game in town in treasury dealing rooms.

Thanks for the input Skenobi.

Ok so from now on we will have some data on how price is moving and from this data we may be able to pick on William's brain and get to some conclusions

At 4:42 we have the first clear audible cote

25-35 cable

Now we have to keep our eyes on the ball, and try to identify what is real time, and what was added later by BBC editing.

So William asks for a quote and he gets 25-35. Ten pip spread on the GBP/USD

He buys 3 million pounds

At 4:52 min he writes 3000 ( weird way of writing millions) and 1,2835 which agrees with the quote above, so this is real time, not editing.

His face shows some apprehension, and for now we can only speculate why he decided to go long.

BBC commentary is that the cable is "already raising" so we have to take their word for it.

So based on the information we have so far:

William is a trend follower. Hold on. Thats the second time we hear about trend following in this documentary. Remember Richard Hill in the beginning?

The proof is the fact that he is trading right the way. Almost trying to catch the movement. Otherwise he would wait for a level and trade in the opposite direction.

So we can say with a certain level of accuracy that in 06-04-1985 William Wong was a trend trader not a counter trend trader.

Now speculating about this guys brains, a few possibilities come to my mind.

he may studied charts in his home last night or in the morning before work.
He has the levels already in his head, meaning he is doing it for a while and he knows to buy 30s and sell 70s.
He is just plain gambling, and hoping that the pair will keep raising as BBC suggest.

Personally, I don't think this guy mess with charts at all. I believe he is just betting the trend will keep developing based on raw price. If it is going up he goes up. Richard Hill said " remember the whole world is long sterling" so I guess William Wong also knows that.

At 4:59 something interesting happens.

Somebody from Australia calls Chemical bank and ask for a quote

William says

30-40

So right after buying for 35 he mark the "merchandise" up 5 pips. Keeping the same 10 pip spread he sets a new price.

It may be only at his bank for now, but you can be sure that the guy that asked the quote in Australia get the impact that the price is raising

There is still apprehension in his face.

At 5:06 into the video he starts to talk.

Ah! I think sterling will go higher

Note how he watche fixedly at the screen before answer BBCs reporter

and ah, well I think the market still looking level to buy sterling, so ah I'm looking to buy sterling too
So thats why I'm paying 30 in the brokers and lets see what is going on, if nobody want to hit me than I will go on and buy some more

Ok a lot of info here. Based in the fact that he looks at his screen all the time, and since we already know what his screen look like it is almost guarantee that he trades based on raw price only. No charts at home nothing. Just follow the price, if it goes up just go with it

Also note that he says I "think" sterling (the market) will go higher. He does not say I'm sure or even I believe. I "think" has more to do with something probable than certain.

If the market is buying I'm buying philosophy. Trend trader.

Now the next phrase I don't really know if he says " on the brokers" or "on the pokers" maybe somebody can pop in and help me. Also he says 30 but he payed 35 so i don't know if BBcs editing changed something.

"Lets see what is going on", again he is not sure.

His last phrase is again trend trading oriented. If other banks jump on the trend he will keep buying. Note that he says he will add positions only if price keeps going his way. He does not suggest to add to losers or average.

So just to recap so far we know:

He does not use charts
He trade with the trend
He understand probabilities
He add to previous positions if they are winners

Quick question.

Is there somebody that can point me for a intraday chart of the cable for june the 4th 1985?

They already had a pretty developed price feed by the time. Even a wireless one to their Reuters pager, so I would assume that this data is stored somewhere.

If somebody could point me to a place where I can download the chart it would be great.

Again it has to be INTRADAY. I did find some charts of 1985 but they are all daily and they look really weird, they are all dojis.

This is just a Reuters "composite" information page (one of many, many composite pages on Reuters 2000/3000). The page code is "AFSE". The 4-letter bank names are just short codes for the Banks (and the center) posting price info to composite page. (These are the codes used to contact via Reuters Dealing terminals).

These prices are NOT deal-able prices. These are just price updates that some junior Bank employee keys in every time there's a dealable price or a price is done. It's NOT real-time. The only real-time price is the price runs given by the brokers and/or the Bank's own market-making.

Err... This page is just a posted snapshot of what the individual banks are quoting. Some banks post prices all the time (not the same as "quoting all the time"), some banks don't give a shit about posting to this page. It's not in any particular order, chronological or otherwise, and therefore not useful at all for "reconstruction". You can safely ignore this one.

This screen is/was a telephone screen with direct lines to banks and/or brokers developed by British telecom.
You touched a name on the screen and it would be answered by a bank or broker without you having to dial a number.

Thanks for the info Skenobi and Lasty.

Any of you guys have an idea where to find the intraday charts I mentioned above?

Again thanks for helping the thread.

You maybe able to get daily opening and closing on a few ccy pairs like GBP/USD USD/JPY USD/CHF AUD/USD NZD/USD of course EUR/USD didnt exist and cross rates were legged.

5:26 into the video and William has a 3 million pound position @ 1.2835

According to BBC he is back on the market quoting a higher price trying to help the pound up

5:34 and we can hear the dialog

40-50

sorry, ok,

40-50 I do.

Quoting you 40-50

In the background we can hear quotes like 40-45 and 45 even .

Note how he is buying slightly higher than the quotes from the squawk boxes, trying to push the price up.

5:43 and he bought another million pounds at 1.2850.

BBC says that by mid morning he is up 21 million pounds

So we know that around 8 AM the cable was @ 25-35

Than 30-40 a little later ( we can't be precise)

Than 40-50

At 5:55 into the video he starts to talk with his coworker. We have the following dialog.

I think I will only sell when it goes above 70

You are right. If the pound goes up a bit more, you should sell.


So we know that " by mid morning", lets say around 10:30 AM, price is not lower than 40-50 but not higher than 60-70

So we can conclude that his 21 million helped the cable climb from 25-35 to above 40-50, around 15 pips.

His expectations are for a 35 pip move.

Now notice how interesting the dialog he has with the other trader.

By the way this other guy seems to be slightly older and more confident than William. I bet he trades the USD/DMK.

At list to me, this other guy looks very smart and confident . Notice how William turns to him specifically for advice.

He look at the same screen William has in his workstation and reinforce the idea of selling if the session range extends a bit more.

The screenshot of Williams monitor posted above is all they have, no charts.

Note by the conversation how the same rule of pit trader apply here. Buy 30s and sell 70s.

Isn't this amazing how 28 years later the same principles are still standing.

Here is Paul Tudor Jones Sunday night trading forex with some pretty big positions on early Asia session with 15 pips spread.

No need to say that the guy has some major "cojones"

Note the parallel between Tudor and William. Pay attention to the levels.

Funnily enough even the voice over presenter is struggling to follow what prices are being quoted and what's going on.

This is a very very interesting clip. So Paul has an idea of a price he want's to buy at and by the looks of it he wants to buy very big as the guy on the other end of the phone hesitates with the size of the order and talks about splitting it up across the market. So Paul is thinking confidently about a position he wants to create.

Unfortunately we have no real idea as to WHY Paul wants to buy and WHY he wants to buy at this price but he says he thinks in 15m there will be some big buying 'when they walk in' ie the market opens (Asia or London??). I would think their is either some fundamental or technical reason for his intentions he wont be just tossing a coin here. So he says 'If you can give me 20130 bid at 45 I'll deal on that' which is him committing to buy at 20130 with 15pip spread? Sadly for him the guy on the phone couldn't get the order through quick enough before the market started rising. Just a few moments and the price has risen too much for Paul!! And he doesn't like it one bit!

We can learn from this that good trading (for Paul) involves buying or selling at a 'good' price, a price that means something. A good price clearly has a certain level beyond which the trade is not going to happen for Paul. So he must do his research beforehand to find the reasons to believe a certain price is a good level to trade at and also decide that if he can't get in at or near that price he wont take a less likely trade on.

We all read about not having a firm belief in your trade and where it will go because that will cloud your judgement and prevent you getting out early when you are proved 'wrong'. When Paul says 'When you take your initial position you have no idea whether you're right or not' he reminds me of this advice.

FO do you think he would still have traded a bit higher than the first quote had he the time? Also who do you think he is talking to over his right shoulder when he askes them if they can believe the price move? His wife? Assistant? TV sound man? Trading partner?