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Billion Dollar Day - Documentary 1986 68 replies

Billion Dollar Day video analysis

Quoting stevexyg
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...
Hi Steve.

You are probably not familiar with this video but this is another documentary that I watched countless times and I'm planing to analyse it later.

It was recorded on 1988 and if I'm not mistaking PBS did it here in America

The clip above is just a small part of the whole video. I did a quick editing to show the parallel to William Wong's approach and how similar they are.

Again it is edited and there is quite some stuff I took out. Paul Tudor indeed took the trade later on but with a smaller lot size.

Yes, it is the PBS documentary guy he is talking with

You can find the whole video in the link below. It is more about equities but still very educational.

http://www.4shared.com/video/zN4VGnE...udor_Jones.htm
Quoting stevexyg
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...
OK he wants to sell deutsche marks versus the dollar at 2.0130 but the price is moving higher and cant get set.. it happens.. he got greedy as he had a chance at 45 but baulked.
I just fixed the link above it seems to be working. If it breaks again just search for Paul Tudor Jones documentary and you will be able to find it from another source.
Ok we are at the end of the part A of the Billion Dollar Day documentary.

I was reading back the analysis so far and part A is well covered.

I'm gonna write what I learned so far before we continue to part B.

William Wong with his 21 million trading cap, does not move the market by himself. Basically he helped the cable raise by buying steadely in the trends direction and quoting higher every time he could.

It is pretty evident he trades on raw price only. We saw the screen shot of his main computer screen and it is the same for all traders at Chemical Bank. Thats all he uses. So his reasons to jump in a trade are not well known but appear to be a visual raw price analysis and also some instincts.

In any moment he demonstrate to be 100% sure of anything. This can be considered gambling for the layman, but in truth is a correct understanding of probabilities which is the very core of the trading business.

These guys William Wong and Paul Tudor should really hurt their wives, because to trade on the Asian session with a 10 to 15 pip spread requires balls of steel

They are risk takers and it appears that the boldest is the greatest. If you compare the balls and the bank accounts Paul Tudor seems to have more of both.

They seem to agree with pit traders here on the model of buying 30s and selling 70s.

Trade with the trend is something that also pops up.

What else?

Now in a personal note I spent a long time in doubt if people could actually play and win in this game. I don't believe all the BS you see on the internet about people trading professionally.

I never saw or even knew somebody, that knows somebody that knows somebody trading professionally forex and living out of it.

A lot of people claim to do it (under the anonymity of the internet) but I never get to meet somebody in flesh and bone.

I decided to prove it to myself and I'm still trying, and still struggling.

Thats why I'm so intrigued by these videos. They are the proof beyond any doubt that a hand full out there are doing it.
Quoting ForexOracle

William Wong with his 21 million trading cap, does not move the market by himself. Basically he helped the cable raise by buying steadely in the trends direction and quoting higher every time he could.
Even in the 80s, 21 million is nothing. He didn't help anything; he just went with the flow and sentiment that was already prevalent in the market.

Quoting ForexOracle
It is pretty evident he trades on raw price only. We saw the screen shot of his main computer screen and it is the same for all traders at Chemical Bank. Thats all he uses. So his reasons to jump in a trade are not well known but appear to be a visual raw price analysis and also some instincts.

In any moment he demonstrate to be 100% sure of anything. This can be considered gambling for the layman, but in truth is a correct understanding of probabilities which is the very core of the trading business.
More likely he just knew how to read the markets. During my time, I've observed a lot of old-school interbank traders who only trade off the prices on the screen and you can practically draw viable horizontal S/R lines where they see prices to be stalling. And you can still do so now using higher TF charts and nothing else.

Quoting ForexOracle
They are risk takers and it appears that the boldest is the greatest. If you compare the balls and the bank accounts Paul Tudor seems to have more of both.
For sure, you need to have a healthy respect for risk.

Quoting ForexOracle
Now in a personal note I spent a long time in doubt if people could actually play and win in this game. I don't believe all the BS you see on the internet about people trading professionally.

I never saw or even knew somebody, that knows somebody that knows somebody trading professionally forex and living out of it.

A lot of people claim to do it (under the anonymity of the internet) but I never get to meet somebody in flesh and bone.
Ok... I accept that that is your experience. FX trading is not my primary income source, but I personally know a couple of people for whom it is. And they won't "claim" anything here or anywhere on the internet simply because they're not bothered. They have no ego, just like that Barclays bigshot.

Quoting ForexOracle
Thats why I'm so intrigued by these videos. They are the proof beyond any doubt that a hand full out there are doing it.
erm... it's not proof of anything, I'm afraid. These guys are trading using their Bank employer's capital i.e. Other People's Money. They're not risking their own money. The mental approach to trading Other People's Money vs that of trading your own capital... they're completely different. In most cases for interbank traders, it doesn't take that much "balls" to trade when they're not trading with their own money.

The thing is, if you put most of these interbank old-timers in the same trading room with retail players, with the same limited access to information that retail traders have, AND trading their own capital, I doubt very much they'd have the same level of success initially, unless they have succeeded in making the change in risk-taking mindset from Interbank Trader With Good Market Intel to Retail Trader With Limited Intel But Bigger Balls.

I respect Paul Tudor Jones and the 3 traders in the first documentary for their ability, but of all the 4 traders mentioned, I think only Jones would have had a higher probability of success initially. The other 3 would not but I fully expect these guys to make the transition in good time.

It's good to see you try to understand how these guys do it. But take my advice as someone who's been trading for Banks for a long time: Don't try to learn how to trade or how to approach markets the way an interbank player would. You will lose money.

I've been retired from interbank and even I think that I have more to learn from retail traders as they have had to trade "blind" all the time, unlike the "hotshot" interbank traders.
Quoting ForexOracle
you are not copying it properly, or pasting it properly.

Make sure you are at the original page and not behind some redirected page.

got it, works like a charm ! thanks
The Force is your friend, not the Trend..
Quoting skenobi
Even in the 80s, 21 million is nothing. He didn't help anything; he just went with the flow and sentiment that was already prevalent in the market.



More likely he just knew how to read the markets. During my time, I've observed a lot of old-school interbank traders who only trade off the prices on the screen and you can practically draw viable horizontal S/R lines where they see prices to be stalling. And you can still do so now using higher TF charts and nothing else.



For sure, you need to have a healthy respect for risk.



Ok......
Thanks for the post Skenobi.

I believe it is related to how people see things. In my case if I had to trade somebody else money I would be terrified. Screwing up my money is bad but losing friends and family or even strangers money would drive me insane.

I could never be a money manager.
I changed my mind about opening a new thread for the next parts of the documentary. I'm just gonna continue writhing here where we are.

I asked the moderators to change the thread title and remove the "part A only" as soon as they do it we can start on part B
Billion Dollar day part B

So lets keep scrutinizing the part B of the documentary and try to learn as much as we can.

I watched all those parts countless times and now doing this analysis here on Forex Factory I'm still catching stuff that I missed in the past, so I guess it has being productive and worth the effort.


Inserted Video
So, from previous posts we know that the cable was raising steadily on 06-04-1985

Starting around 8 AM Hong Kong local time we have

1.2835
1.2840
1.2845
1.2850

Those are all quotes we heard from the squawck boxes or from William himself.

We also know for a fact that he is aiming for 1.2870 where he will take his profits.


The first thing we see on part B is the continuation of the conversation between William Wong and that other supposedly more experienced trader.

William asked him for an opinion and he agrees that if the cable climbs a bit more it is better to sell it.

When London opens they may sell the pound

Yes if the wind keeps on blowing in the same direction

For now thats all we have from William, chemical bank and the asian session. BBC now cuts to Connecticut USA.

Before we go further I would like to ask if somebody that speaks Chinese could give us a help and post a transcript on the conversation between William Wong and the other trader.

I'm pretty sure they are saying a lot more things than the subtitles BBC generated. The more details the better so if somebody can help us it will be really appreciated.

I would like to ask again if somebody can point me to a place where I can find intra day charts from the date of the documentary.

It may not be possible but I will keep asking once in a while and who Knows maybe somebody will pop up with some place wher this data is stored.

Oh! I forgot to mention that at 0:06 of the video we hear

Sixty cable

so it was already at 1.2860 during their conversation
Your caption..

"A man should look for what is, and not for what he thinks should be." Albert Einstein

I don't think Albert would make a good trader as the opposite applies.

BTW I'm enjoying your analysis of the video.
Quoting lasty
Your caption..

"A man should look for what is, and not for what he thinks should be." Albert Einstein

I don't think Albert would make a good trader as the opposite applies.

BTW I'm enjoying your analysis of the video.
Are you sure Lasty?

When I got rid of what I thought the market was doing ( meaning what I wanted the market to do) and concentrating on what the market is actually doing I started to trade on another level.

But anyways I respect your point of view.
Quoting ForexOracle
Hi Steve.

You are probably not familiar with this video but this is another documentary that I watched countless times and I'm planing to analyse it later.

It was recorded on 1988 and if I'm not mistaking PBS did it here in America

The clip above is just a small part of the whole video. I did a quick editing to show the parallel to William Wong's approach and how similar they are.

Again it is edited and there is quite some stuff I took out. Paul Tudor indeed took the trade later on but with a smaller lot size.

Yes, it is the PBS documentary...
thanks FO, I came across the entire film recently and watched it all very interesting. thanks for answering questions. I wonder if they needed a lot of persuading to agree to this intrusive filming.

In reply to skenobi, no we can't trade like the big guys because obviously we can't fix the market with massive orders or arrange something with other brokers to manipulate price or find out about large orders/positions but we can learn from their mindset and emotions. very good point about relationship to the money you are trading when its not yours. but we can also learn how the enemy operate here - if we believe institutions may be out to stitch up retail traders? what do you think? is taking retailers cash part of the game?
Quoting ForexOracle
Are you sure Lasty?

When I got rid of what I thought the market was doing ( meaning what I wanted the market to do) and concentrating on what the market is actually doing I started to trade on another level.

But anyways I respect your point of view.

But how do you know what the market is actually doing? Are you saying you trade on complete information, opposed to incomplete information?
Play the players, not the cards.
Quoting GnarlyPips
But how do you know what the market is actually doing? Are you saying you trade on complete information, opposed to incomplete information?
It took six years for me, and I'm still not there. I'm getting there.

Tons of screen time, frying my brain , flattening my butt and burning my eyes in front of the computer, 16 to 18 hours per day.

All that to start to learn o see what it is. Not what I want it to be.

And again I'm in no way THERE but I'm definitely better
Quoting stevexyg
I wonder if they needed a lot of persuading to agree to this intrusive film.
Paul Tudor spent a small fortune trying to keep this video from the public eye. He sued PBS and got then to never air it again. And he went to ebay and all over the net buying all the VHS tapes he could.

But once the genie is out of the box

At least that's what I read in the internet.
0:18 min into the video and we are at Rony Schlapfer's house in Connecticut USA.

Its is around 10 PM and Rony is watching the news.

Now lets go to 1:03 min and we for the first time can put time on some quotes.

So far we had quotes from William at Chemical banks but we were guessing the time, now thanks to the screenshot below from Rony's computer we have specific time.

There is a lot of info there at around 10:15 PM the cable was around 1.2870-80 give or take a few pips

Actualy we have pretty much 3 main quotes

1.2875-85
1.2867-77
1.2870-80

We know that Hong Kong is 24 hours forward form Connecticut so we can add more data to our price reconstruction knowing that at around 10:14 06-04-1985 William Wong was around +35/+40 pips in his trade.

We also know that the high and low are respectively 1.2915 and 1.2810. The only thing I could not figure out wast what time frame they are using to calculate their high and low quote. 24,12 weekly it is not evident.

Anyways we now know that by mid morning as BBC says William was done buying he was 35 pips in profit. Now we saw that his first position was opened at 1.2835. The rest of the 18 millions he bough are divided along other prices. But we can say for sure that the bulk of the trades are all in profit.

Now we have to add what Rony schlapfer is doing because it will be important later.

BBC states that he made 50% profit for his customers last year. Now we don't know how much money he manages between his own and the clients, but we know that it is at least 500 grand so 500 times 13 is 6.5 millions.

Fifty percent of 6.5 millions is 3.25 millions. Fifty percent yearly is 4.16 per month or around 0.2% per day considering a 20 day period.

At 1:06 min he is calling His partner Brad Westerfield and telling him to square his books.

Hi Brad.

I think you should call ------ and , ah, why don't you sell 26 million marks and we have a look tomorrow. Early tomorrow, we call each other, ah
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Attached Image
1:17 into the video and after a quick glance at Rony Schlapfer we are back in Hong Kong.

William is taking a quick lunch break. We will see as the documentary progresses that the London traders eat sandwiches at their desk. William at least can go for a quick lunch.

at 1:39 min we see the pic below. This "pager like" Reuters receiver give us the quote of 1.2847/57 but unfortunately does not give the time.

This quote is also not very reliable because you never know when BBC filmed it. It could be done later and they just inserted the part on the editing

BBC says that William is taking a early lunch so we can situate the time around 11 AM price around 1.2860. He is in profit.

The camera cuts back to the banks trading room and according to BBC William decided that the pair has pick.

Now we learn that he can't just go ahead and call a broker and sell everything he bought.

He has to hide what he is doing so he can sell maximize his exit getting out before the market tanks.

We discussed in past posts about how his positions ( total of 21 million pounds) helped the market to go up.

Some people disagreed. saying that even back than 21 million was not enough to move the market.

Well we are about to know the truth.
At 2:35 min they start to sell. and we can hear some quotes from the squawk and traders

56-61
57-62
58-61
55-65

2:60 min they are done

21 million pounds sold in 25 seconds

Finally William gets the last quote after 21 millions are sold

50-55

So thats the proof that 21 million did move the market back than. Around 5 pips.

If dumped at once 21 million would move price a lot more.

We can see William calculating his profits using the bases of 1.2850 and 1.2845 we don't know which numbers he typed before but the result is 31 pips and change for his total positions.

Using 1.2840 as a referential we can convert pound to dollars and conclude that he traded around 27 million dollars


At 3:18 min William says.

Ah, is a good morning. This morning I made 20 thousand us dollars.

20 grand is around 0.75% of 27 million.

There is lot to be learned from the way they closed their positions etc. And I will address it next post.

For now what jumps out is:

They moved the market. When he bought slowly up he helped price to climb

When he got out of the market abruptly around 25 seconds, price reacted dropping 5 pips.

A institutional trader is happy with 0.75% in one morning.

Another interesting point is how the spread got smaller as they got into the market selling, probably because of added liquidity.
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Quoting stevexyg
thanks FO, I came across the entire film recently and watched it all very interesting. thanks for answering questions. I wonder if they needed a lot of persuading to agree to this intrusive filming.

In reply to skenobi, no we can't trade like the big guys because obviously we can't fix the market with massive orders or arrange something with other brokers to manipulate price or find out about large orders/positions but we can learn from their mindset and emotions. very good point about relationship to the money you are trading when its not yours....
"Is taking retailers cash part of the game?" For interbank traders, the short answer is no. They have bigger fish to fry.

Retail traders are not even in the same galaxy as interbank traders. Even if anybody's screwing with retail traders, it would be the retail FX brokers, which are NOT the same as or operate the same as interdealer brokers. Interdealer brokers make their money from commissions on trade volume done.

God knows HOW retail FX brokers make money.
I think you're reading way too much into this documentary. It's simply an outsider's view of an insignificant subset of activity that it makes it look like the 3 traders are in some sort of game against each other. The documentary even asks, "who wins?" as if the 3 traders are even aware of each other's existence or even cares. The casual TV audience might even think there are very few of these traders when in fact there are thousands if not more.

Quoting ForexOracle
So thats the proof that 21 million did move the market back than. Around 5 pips.
Based on the misguided premise of the documentary (which is: looking at the actions of only 3 traders in isolation on a single trading day, while completely ignoring the fact that there are THOUSANDS of other interbank guys all over the world acting in concert), you would be forgiven for believing such a thing.

1. This is exactly what I meant by "21 million is nothing". 5 pips to an interbank trader is chump change. "Moving a market" means moving a pair 20-30 pips or more. Even more pips is required if we're talking about any yen pair, which is another way of saying that for any yen pair, 20-30 pip moves can be pretty normal especially when the move only meant some kind of reversion to a mean.

2. You're also ignoring other possibilities in cause and effect. Consider this: William wasn't the only sterling buyer in town. Even if he didn't buy 21 million, it is more likely that the market would have taken cable higher regardless of William's tiny amount. Dozens of Banks (if not more) could've taken cable higher and William was just tagging along for the ride.

3. Didn't you notice the high price of 58-61? And then the next price at 55-65? When William finished selling, the price was then shown to be lower at 50-55, and so you understandably assumed it was William's selling that did it. You're forgetting that William was not the ONLY seller in the market either. You're also not noticing that there were still bidders at 50 holding in the market for a possible resumption of the bullish move. So even if what you assumed was true, that William's selling moved the market 5 pips, he could not have been that successful at "moving" anything at all since the wall at 50 was still there. You can see this when the Russians started buying GBP/DEM in size later in the documentary, keeping GBP/USD well-bid in the process.

4. It didn't matter if cable actually did move lower due to the reaction to money supply stats that were released, as long as you understood that William's actions were just part of the "herd".
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