1.8 KiB
Entity: Cosmopolitan Bucket Shop
Definition
A trading venue characterized as the richest bucket shop in New England, offering extensive trading options including stocks, commodities, and more. It served as a last resort for traders and implemented strict margin and premium requirements that affected trading capacity.
Category
market
Context
The Cosmopolitan bucket shop imposed a three-point margin and a premium on trades, limiting the trading capacity of its customers. It was notable for its comprehensive quotation board and handling of various instruments across multiple exchanges.
Source Evidence
"It was the richest bucket shop in New England... they put no limit on a trade... it had thousands of patrons and I really think I was the only man they were afraid of."
Entity: Trading Premium
Definition
An additional cost imposed by a broker or trading venue that increases the entry price of a security, effectively raising the breakeven point for the trader and diminishing potential profits.
Category
error
Context
The requirement of a premium added to the price a trader paid for a stock exaggerated the losses even when the stock increased in value.
Source Evidence
"It meant that if the price was 90 when I bought... instead of making my ticket: ' Bot Steel at 90⅛ ,' it read: ' Bot Steel at 91⅛ .'"
Entity: Margin Requirement
Definition
A prerequisite where traders must deposit a certain percentage of the total trade value, reducing their capacity to trade by limiting the amount they can leverage on their balances.
Category
error
Context
The requirement of a three-point margin significantly reduced the trader's ability to maintain positions and limited the size of trades he could execute.
Source Evidence
"they reduced my trading capacity by two-thirds."