Tape Frustrations

[strtedat22 10]

Greetings,

 

How can the small players (like myself) front run larger contracts? Is there level2 for the mini YM i dont know about

 

strtedat22

[smwinc 20]

Fronting large contracts, or 'leaning on size' is where you are looking in the price ladder (displaying the bids and offers). If you see someone come into offer an abnormally large amount at a price, you offer to sell 1 price below.

 

Better for thinner, more volatile markets - DAX, Taiwan, Singapore, Hang Seng, SGX Nikkei (leaning on the arb size) etc.

 

For the record, I don't really agree with doing that unless you are in an environment where commissions are low. The price ladder is an entire world of it's own, with it's own pyschology, rules and dynamics.

 

Generally, the idea behind showing large size is to scare weak holders. If there are no weak holders, clearly it doesn't work.

 

Imagine if your sitting Long in a trade, 30 ticks on-side, and someone offers a large amount to sell suddenly. You don't really "care" - even it moves 10 ticks down, your still in profit 20 ticks. If there aren't enough weak holders, what often happens is people front the size, but then someone takes the large order and reverses it to sending the market bid at that level. Then everyone who fronted the larger order is now offside, creating new weak holders to cover, sending the market higher.

 

However, if you were sitting 5 ticks OFF-side, you're sitting their nervous, watching every tick, hand on the trigger to get out. Suddenly someone offers a large amount to sell, and you go "$#* I need to get out" and sell. Others do the same, and cause a mini move down.

 

It is ALL about the pyschology of the market at each point.

[strtedat22 10]

Fronting large contracts, or 'leaning on size' is where you are looking in the price ladder (displaying the bids and offers). If you see someone come into offer an abnormally large amount at a price, you offer to sell 1 price below.

 

Better for thinner, more volatile markets - DAX, Taiwan, Singapore, Hang Seng, SGX Nikkei (leaning on the arb size) etc.

 

For the record, I don't really agree with doing that unless you are in an environment where commissions are low. The price ladder is an entire world of it's own, with it's own pyschology, rules and dynamics.

 

Generally, the idea behind showing large size is to scare weak holders. If there are no weak holders, clearly it doesn't work.

 

Imagine if your sitting Long in a trade, 30 ticks on-side, and someone offers a large amount to sell suddenly. You don't really "care" - even it moves 10 ticks down, your still in profit 20 ticks. If there aren't enough weak holders, what often happens is people front the size, but then someone takes the large order and reverses it to sending the market bid at that level. Then everyone who fronted the larger order is now offside, creating new weak holders to cover, sending the market higher.

 

However, if you were sitting 5 ticks OFF-side, you're sitting their nervous, watching every tick, hand on the trigger to get out. Suddenly someone offers a large amount to sell, and you go "$#* I need to get out" and sell. Others do the same, and cause a mini move down.

 

It is ALL about the pyschology of the market at each point.

 

Tell me more about the spreads that take place on the DOM? How can someone benefit from the spread? I see them showup on the T&S but i dont find any signifigance in them.

 

strtdat22

[smwinc 20]

There is no one way to profit from a spread between the bid and offer. Plenty of people just sit on the bids and offers all day and make their living doing that, constantly getting flicks in and out.

 

In different situations, spreads are created by locals to profit from stop-market orders.

 

E.g.

 

When you are trying to bust a high in the DAX, the purpose is just to get those stop-market orders coming in.

 

What happens is a high is busted, and simultaneously locals pull & hit the bids. The goal is to create a spread even for a few seconds - the high is busted and stop-market orders come flowing in and cross the spread for you, filling you on your take profit / sell orders on the offer.

 

There is honestly thousands of examples that aren't really fitted for trying to detail in a forum. As a whole, manipulating spreads are about a) manipulating Market orders and b) trying to scare weak holders.

[strtedat22 10]

lets say its the high of the day. on the YM DOM you see 150-200 contracts on the ask. 60,15,10 gets lifted from the amount on the DOM. But there is a sudden rise after those offers . One wouldnt consider it bluffing correct?

 

strtedat22