why should I ask the person on the other side to give me the same risk when I want to trade a 1000 times larger, so I know what the cost of doing business is, but business is cheapest, most efficient and the best on the floor. The one other thing I should say is that Tom has all these business so he must have been pretty successful, so if I can be on the same side of his trade, rather than the other side, I'm probably in good shape.

Tom Baldwin: It's nice to hear some one like Peter be so conciliatory to someone who trades on the floor of the CBOT. I wish most people had the perspective he has, which I agree with. A lot of people don't understand floor trading. It is really a job of making a market. That job is to facilitate orders for managed futures and for people not speculating. But remember, the real basic reason for the business is hedging. That applies to people who don't really care where price goes, they are just interested in transferring their risk. A need to make a market for those people, that is the core of the business. As a trader on the floor, what happens when you start to trade bigger size you have to develop some sort of speculative strategy otherwise you would not be able to trade the size Peter trades. You need to change your style, you can not be blind to every order that comes in the pit. That's what I try to do and so I end up with a reputation of Baldwin is selling or Baldwin is buying. Making a market for T-bonds is my job. Everyday is different and you have to

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Peter Borish: Tom, when you are down on the floor and you see all • Analyst Hype sorts of price activity taking place, for example tomorrow we know • CNBC News BS

^ J ^ • No Day Trading unemployment figures are coming out and the only thing we know for • Breakout Hype

• Tip Nonsense certain is there is going to be volatility after the number. Compare • David Faber Hype

, 1 ! • Buy & Hold? No how you step up and provide that liquidity in the marketplace, • Fed & Greenspan somebody like me vs. what happens for the downstairs. Who makes • Brokers Do Not Help

• Microstrategy the first more after a number comes out? Is it locals or somebody • Goldman Sachs

upstairs putting in an order to trade? M0re H0ly Grails

Tom Baldwin: With your example where the number is so • Avoid Like Plague

• Larry Williams important, it is usually a combination of both. Everybody knows what • Motley Fool(s) the effect of the number is going to be. So if it is way out of line, the R^OurceST^

people in the pit understand the market is going to go is the direction Free Resources ... , . • Free MP3 Audio that it is out of line. The upstairs orders also come in at the same • Our Reading List time. The object is to move the market as far as you can to a point

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Peter Borish: (Sarcastically) But, it opens @ 97. It says in the daily newsletterrange that it's from 97 to 98, how come after the number came out @ 97.04, I can't filled @ 97.06? I want to buy a lot there!

Tom Baldwin: The reason you can't is that is really not the market. At 7:29 am before the number comes out the market is at 'x' and then when the number comes out and its out of line, the actual market has a gap between where it eventually goes to and where it starts. And in between there is really nothing there because the market is now here. And most people are not accustomed to that jump and they are not aware that there is really nothing to trade there, unless it is by luck. i.e. there was resting order that happened to be there, doesn't happen often. So you would never get filled at those prices. It would be very easy if when the number came out and you said gee that's way out of line and it's really bullish and I want to be long 1000 bonds, well the rest of the world is not stupid either and they see its out of line so they decide not to sell now. When it rallies a point then I'm going to sell it. Because that is where the market should go to based on that number. It's like saying I wish I could buy 1000 bonds a point below market, but it's not the market.

Peter Borish: If I had a stop in the pit and it gets filled far away it's not like every single local in the pit happened to get a piece of that on the way up and as soon as I get filled it comes off 10 ticks?

Tom Baldwin: The nature of the game...

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