Alan Glynn - The Dark Fields aka Limitless

I nodded.

‘Then you’ve got technical analysis. That’s where you study price-and-volume patterns and basically try to understand the psychology surrounding a stock.’

He continued looking at the screen as he spoke, and I continued nodding.

‘But trading is not an exact science, Eddie. I mean, the stock market can’t be pinned down to any one system, which is why you get fuzzy talk of “irrational exuberance”, and people trying to explain market behaviour in terms of psychiatry, biology, and even brain chemistry. I’m not kidding you – there were actually suggestions recently that investor caution was being inhibited by the high percentage of brokers and dealers on Prozac. So,’ he shrugged his shoulders, ‘given that no one knows anything, it’s not surprising that most investors use a combination of the three basic approaches I’ve outlined to you.’

Over the next hour or so, still standing at the table – and looking like he’d just stepped in from a vigorous game of tennis – Bob Holland expanded on these ideas and also went into the minutiae of options, futures, derivatives, as well as bonds, hedge funds, global markets and so on. I took a few notes, but when I heard the explanations I realized that in a general way I did understand these terms, and that furthermore, just by thinking about this stuff, a large store of knowledge was being unlocked in my brain, knowledge that I had probably accumulated unconsciously over the years.

When he’d done with the big picture – how the investment banks and fund managers operated – he started in on day-trading.

‘Then you’ve got guys like me,’ he said, ‘the new pariahs of Wall Street. Ten years ago it was the LBO types, the Gordon Gekkos. Now it’s the geeks in baseball caps who sit in front of computers at home and trade thirty or forty times a day, picking off eighths, sixteenths, even thirty-seconds of a point per share, and then closing out their positions before the end of trading.’ He looked away from the screen and directly at me, for maybe the second or third time since I’d arrived. ‘We’re accused of distorting the markets and causing volatility in share prices, but that’s bullshit. It’s what they said in the Eighties about the takeover guys. We’re just the new wave, Eddie – electronic day-trading is the spawn of technology and regulatory change. It’s that simple, it’s flux, it’s the nature of things.’ He shrugged his shoulders again and turned back to the screen.

‘I mean, come here – look at this.’

I stepped over quickly and stood behind him. On the middle screen, the one he was working at, I could see tightly packed columns of figures and fractions and percentages. He pointed to something on the screen – ATRX, a stock symbol for a biotech company – and said, ‘This one opened at around sixty dollars a share and has just pulled back a little so its bid is now 59⅜… and its offer…’ he pointed to another part of the screen, ‘is 59¾ – that’s a ⅜ spread. Now the thing is, thanks to the latest software, and to regulatory changes introduced by the Securities & Exchange Commission, I can trade within that spread, and right here in my living-room.’

He highlighted the row of figures after the ATRX symbol and stared at it for a while. He checked something on one of the other screens, came back to the first one and keyed something in. He waited for a couple of moments and keyed something else in. He waited again – one hand held up in mid-air – and then said, quietly, ‘ Yes .’

He turned around to me and explained what he’d done. Using that new trading programme, he’d discovered that there were three marketmakers on ATRX’s bid and two on the offer. Reckoning that ATRX would rebound, he took advantage of the wide spread by bidding 59 for 2,000 shares, which was over the best market-maker bid. Having topped this bid, Holland then got first in line to execute an order. The first 2,000 shares for sale at market went to him at 59. Very soon after this he offered to sell for 59, which was still lower than the ask price posted by the big market-makers. Holland had guessed right, and the stock was taken off his hands almost immediately. In just fifteen seconds and a few strokes of the keyboard he had netted over $500 and cut the spread by of a point.

I asked him how many trades like this he made every day.

Holland smiled for the first time. He said he made about thirty trades each day, mostly in lots of 1,000 or 2,000 shares, and rarely held a stock for more than ten minutes.

He smiled again and said, ‘OK, they’re not all like that one, but a lot of them are.’ He paused. ‘It’s about identifying ripples in the charts and then reacting quickly.’

‘You mean, it’s not just about who has the most information?’

‘Shit no. With all the indicators that are available these days, you just end up with conflicting signals. Shit no.’

Now that I had his attention, I bombarded him with more questions. How much preparation did he do for each trading day? How many positions did he keep open at any one time? What kind of commissions did he pay?

As Holland answered each of my questions, he gradually pulled himself away from the computer screens on the table. Then he started making himself an espresso, but by the time it was ready and he was drinking it, he seemed to have become sufficiently detached from his work to notice again that he was wearing nothing but boxer shorts, and to be self-conscious about it. He knocked back the remainder of the espresso, excused himself and wandered off down the hall into what I assumed was a bedroom.

In his absence, I went over to look at the computer screens again. It was amazing… he had made $500 – the price of one hit of MDT – in just fifteen seconds! I definitely wanted to learn how to do this, because if Bob Holland could execute thirty orders in a day, I was sure that I could manage a hundred, or more. When he came back, wearing jeans and a T-shirt, I asked him how I should go about learning. He told me that the best way to get into day-trading was to just do it – trade , and that most of the online brokers facilitated this by giving free access to simulated trading games and by conducting live tutorials.

‘Simulation games’, he said, in a tone that was becoming increasingly stilted, ‘are an excellent way of developing your skills, Eddie, and of gaining confidence in placing trades but without actually having to take any risks.’

I got him to recommend some online brokers and software trading packages, and as I wrote this stuff down I kept firing questions at him. Holland answered everything I asked him, and comprehensively, but I could see that he was becoming slightly alarmed, as if the rate and nature of my questions was perhaps more than he’d bargained for – as if he felt that by answering them, by passing on this information, he might be unleashing some kind of Frankenstein monster into cyberspace, some desperate, hungry individual capable of who-knew-what financial atrocities.

It had taken a while, but Holland was completely focused on me now. In fact, he appeared more concerned with each new question and started introducing a cautionary note into his answers.

‘So look, start small , start by trading hundred-share lots for the first month or so, or at least until you find your feet…’