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diablo272

Floor Traders

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I've had the following questions regarding floor trading for a while now:

 

1. In the case of index futures, do the floor traders trade the full sized contracts? I'm guessing they can't trade the e-minis since I thought they were supposed to be fully electronic through Globex only. Either way, do we as screen traders (retail or institutional), have access to floor trade data? That is, if a floor trader makes a trade, would a screen trader be able to see it on T&S? When would it show up (I'm guessing there would be significant delay)? Does the price action on the floor have an effect on the price of the instruments we screen traders have access to? Or is it like the floor is its won market, and retail is different? I am asking about floors with a pit specifically, because I think exchanges like the NYSE don't have pits where trading takes place.

 

2. I realized I included all of my questions in #1.

 

Thanks!

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I've had the following questions regarding floor trading for a while now:

 

1. In the case of index futures, do the floor traders trade the full sized contracts? I'm guessing they can't trade the e-minis since I thought they were supposed to be fully electronic through Globex only. Either way, do we as screen traders (retail or institutional), have access to floor trade data? That is, if a floor trader makes a trade, would a screen trader be able to see it on T&S? When would it show up (I'm guessing there would be significant delay)? Does the price action on the floor have an effect on the price of the instruments we screen traders have access to? Or is it like the floor is its won market, and retail is different? I am asking about floors with a pit specifically, because I think exchanges like the NYSE don't have pits where trading takes place.

 

2. I realized I included all of my questions in #1.

 

Thanks!

 

Here's what I've seen and been told from guys in the business:

 

FLOOR TRADERS: While they are trading on the floor and may be trading pit sized contracts, they can in fact trade electronically as well. If memory serves, you can hear this being mentioned on a squawk service from time-to-time. I was told this from one of the creators of the T4 software that I used previously to moving to OEC. They actually created T4 for the guys in the pits and then branched out to retail.

 

In order for you to see the trade, you would need data on the pit traded contracts or know when a floor trader was using the electronic version.

 

As for the movements in the markets - pit vs. electronic - they are similar, but don't move in perfect harmony. For example, the S&P pit contract moves in .10 increments, while the ES moves in .25.

 

If you are wanting to know when these guys are trading w/o being there, my best guess is that a squawk service is the closest thing you will get - but bear in mind just b/c you might hear that Goldman is buying does not mean the market is going to go up right then and there. Maybe Goldman is unloading some shorts, maybe they are building a multi-week position, maybe their stop is at a level that you could not possibly stomach... I personally never got anything from a squawk.

 

Depending on your broker or data service, you might have pit traded data available or could add it on. Bear in mind that the volume on the pit traded contracts is significantly lower than the e-versions.

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Diablo,

 

The floor traders do have access to the mini via handheld units and they also have clerks that can place emini orders for them. The floor has a major influence on the screen price at times and we cover this in the squawk service we provide from the floor. Please call me if you would like to discuss this topic further. Ben 773-580-7576

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Diablo,

 

The floor traders do have access to the mini via handheld units and they also have clerks that can place emini orders for them. The floor has a major influence on the screen price at times and we cover this in the squawk service we provide from the floor. Please call me if you would like to discuss this topic further. Ben 773-580-7576

 

Ben - did you guys ever create a 'how to use our service' guide? I thought a number of months back you had mentioned something about doing a guide or some videos or something so that guys like me could see what value a squawk provides. I could be wrong, but I thought in another thread this was brought up and I don't recall seeing any updates.

 

Thanks.

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Also don't forget that with most index futures the different flavours are fungible (mutually substitutable). However ES and SP (for example) are different instruments and trades are reported separately. Unless things have changed SP trades must be reported within 'X' minutes. X is relaxed to 'Y' if a market is declared as 'fast'.

 

Last time I watched both ES & S&P (which was a long time ago when the big contract was clearly the king), it was like watching an elephant (S&P) with flies (ES) on it's back. It would be interesting to compare now.

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The SP and ES can never get far away from each other as there are many arbitrage traders. They work in pairs communicating with radio head sets, one in the pit and the other sat in an office with electronic access.

 

Mainly they are just looking to get the 5 cents offered in the different tick sizes. Eg. buy 827.70 in the pit and sell 5x as many at 827.75 in the emini. As Ben so succinctly puts it "picking up nickels in front of a steamroller".

 

It's difficult to which leads the other as action in one will always be followed by the other. So I think they take turns depending on where the big players choose to strike.

 

I used Traders Audio for a long time and learned a lot about how trading works from Ben's commentary. The trading style I use now means I now longer use it but it was a valuable part of my education.

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We have done a few tutorials. The links are below. We also post regularly updated videos on YouTube - tradersaudio's Channel[/media]

 

 

[ame=http://www.youtube.com/watch?v=L1ET89yymLY]YouTube - Squawk Tutorial - SIXTH - supply and demand[/ame]

 

[ame=http://www.youtube.com/watch?v=DydWmbcfgaE]YouTube - Squawk Tutorial - FIFTH - top trading rules[/ame]

 

[ame=http://www.youtube.com/watch?v=PffkcdSEHjs]YouTube - Squawk Tutorial - THIRD - million dollar secret[/ame]

 

[ame=http://www.youtube.com/watch?v=t2wICn2Q9Y0]YouTube - Squawk Tutorial - FOURTH - are you abnormal[/ame]

 

[ame=http://www.youtube.com/watch?v=OqhYo1HpTkc]YouTube - Squawk Tutorial - SECOND - squawk to exit trades[/ame]

[ame=http://www.youtube.com/watch?v=8W0J3pDiOHg]YouTube - Squawk Tutorial - FIRST - what is squawk[/ame]

 

Edited by Soultrader

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