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Bill Bradt: Trading Oil Takes Strong Voice, Steady Nerve

June 14, 1986

NEW YORK (AP) _ Bill Bradt’s voice is often raspy, but that comes with the territory when you spend your days as a trader at the New York Mercantile Exchange.

And this was only Wednesday. ″You should hear me at the end of the week,″ he quipped.

Actually, it was only half a joke, considering the din that fills the cavernous trading floor shared by four commodity exchanges.

Crowded up to six-deep around the pits, traders shout, yell, jump, elbow, wave their hands in all kinds of frantic gestures - whatever it takes to buy and sell the contracts they are dealing in.

There is no time for worrying about details. You make a decision, then make another. And if you make a mistake, just move on and try to do better next time. Too many mistakes, though - and there is no next time.

These are some of the rules a trader lives with, Bradt said.

He said he served in Vietnam before taking a series of jobs in the securities and commodities businesses. In 1980, buying his own membership, or ″seat,″ at the New York Mercantile Exchange, Bradt stuck out on his own as an independent speculator, known on the floor as a ″local.″ The seat cost him $65,000.

This past May, reflecting the exchange’s emerging importance to the oil business, seats changed hands at $105,000, then $115,000, and most recently $125,000.

Brokerage and investment houses, along with users within the oil industry, own about half the exchange’s 816 seats, while locals hold the rest.

A trader working for a corporate owner or brokerage may earn from $35,000 to $100,000 a year, according to various estimates. Locals earn - or lose - widely varying amounts.

Bradt will not say how he does. But it is no secret that some locals become rich, while others, as one market observer put it, ″get carried out on stretchers.″

″We’ve had guys just walk. Disappear. Leave everything,″ Bradt said.

It is an intense, rough job.

Virtually all traders are young men averaging 26 to 28. They usually last about three years. At 41, Bradt is ″one of the older guys down here.″

Bradt is on his feet jostling and shouting from mid-morning until about 3 in the afteroon. There is no time for lunch or other breaks. Prices move too quickly. ″One day I went out to go to the john and it cost me 1,300 bucks,″ he said.

Raw throats are a common malady, along with foot problems. Some pit workers wear earplugs.

Oil, corn, cotton, gold, silver and other commodities are traded at various pits of the four commodities exchanges. These days, some of the hottest action is at the pits of the New York Mercantile, home to futures trading in crude oil, gasoline and heating oil.

On a recent visit, about 200 traders were packed around the crude oil pit on the far left side of the floor.

″July 3/8 July 3/8 77 bid 3/8″ one trader shouted, flinging an arm outward over his head toward the crowd.

High up on the wall, a giant scoreboard recording crude prices showed that the last contract for July delivery sold at $14.83 a 42-gallon barrel. At a nearby bank of phones, the trader’s partner may have just taken an order for 10 1,000-barrel contracts for July crude at $14.77. But the trader gets no takers.

″81 for July 3/8″ shouted another, crossing his arms back and forth over his head. ″July at 85 3/8″ screamed a third.

Suddenly, July at 85 fixed his eye somewhere across the pit. By nod or gesture, a deal was made. The trader scribbled the data, threw a slip of paper into the center, and within minutes the price of July crude had jumped to $14.85.

To the outsider, it’s hard to believe any serious business is done in such an atmosphere. But, Bradt said, ″Your ears become fine-tuned. Your mind becomes a computer.″

It also takes a special personality to succeed as a trader.

″Some guys just can’t do it. They don’t have it,″ Bradt said. ″You can’t be shy. You have to speak up and say your mind. I remember when I first came down to the floor in 1980, someone told me: ‘The guy who makes it here is a street fighter.’ A sheepish individual just doesn’t last.

″A guy with an ego, who can’t stand a little humiliation, won’t last either. You can’t be afraid to make a mistake.″

At least half of the trading is done by companies in the oil business seeking to lock in prices for selling or obtaining oil, making it easier to plan future actions without having to worry about wide price swings.

The gambling is done by the locals, who use various strategies aimed at profiting from the way the market moves, seldom paying attention to the daily theorizing of analysts or other observers.

″I only watch the flow,″ Bradt said. ″I don’t (care) about what anybody says about anything. I listen to the beat of the market.″

Bradt said he averages about 100 trades a day, each one of which may be for 500 or 600 contracts at 1,000 barrels each. Traders who work for companies - known as floor brokers - handle far more.

″The other day I spoke with a floor broker who said he had handled 9,000 contracts that day,″ Bradt said. ″That was in about 300 trades.″

He said the floor broker claimed he did it with no mistakes. But mistakes do happen, and they can be costly.

One local made an error when writing down a transaction for 250 contracts. ″It cost him $30,000 - and he couldn’t afford it,″ Bradt said. The trader, he added, is no longer at the exchange.

Despite - or perhaps because of - the shoulder-to-shoulder intensity of their daily work, floor traders maintain a certain mental distance from one another, Bradt said.

In fact, a lot of the traders know each other only by the coded name on the badges they wear, the codes they use in recording transactions. Bradt’s is BIGE.

″I’d say we’re cordial to each other, but to say we’re friends - you can’t say that,″ he said.

″A lot of guys are related to each other. But there are also guys down here who will smile at you, but who are there to make a buck, and if they do so at your expense, that’s what they’re there for.

″In this business, the best friend you have is the dollar in your pocket.″

End Adv Friday June 13

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