Jake James

Parallels of Financial Markets, Trading, and Real Estate

As part of my career path, I worked for an algorithmic trading firm. The kind of firm that hires Caltech and MIT kids to come in, learn the markets, and create algorithmic trading strategies to suss out inefficiencies to make millions of trades per day, making markets and a spread of a few cents (on average).

I wasn't one of these guys, but I was part of the support structure that would make sure everything was operational and that the integrity of the trading platform was intact. If there were any problems, we would be on the front lines.

As I started working there, I didn't know what a futures contract or the CME was. But one of the reasons I took that job was to learn how our financial markets worked, so I started learning all about the different product types and trading strategies. For a while, I really wanted to be trader, but not an algo trader, a discretionary trader. I enjoyed seeing the intersection of macroeconomics and the markets played out. Basically, I liked seeing how news and world events affected commodity prices and the stock market.

However, at my firm, none of that really matters. It's more about speed, knowing all the rules, and how to squeeze out every last inefficiency. Later, as the firm grew, and as I had learned enough to finally start putting my own money at risk, we went public, acquired a couple of other firms, and eventually I wasn't allowed to trade on my own. Not unless I wanted to only trade equites, during a specified window, and have a long hold time. Not what I had taught myself to do. To my dismay, when I saw opportunities to short, or make short term bets, I was not allowed to.

As I started learning more about CRE, the more I started to see similarities to trading and the financial markets.