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Beware when trading eCBOT
- Thread starter Punamytsike
- Start date
Regardless of any fancy high tech entry systems, in the Pit, the boys standing there physically, really know what's going on( including the large accumulation of stops) and therefore can very easily manipulate the market.
But of course they(Exchanges) will never tell you that. The can do no wrong EVER.
YEAH Right!
But of course they(Exchanges) will never tell you that. The can do no wrong EVER.
YEAH Right!
I was a pretty decent sized local in the Bond pit for well over a decade. Did I ever over hear a clerk giving his filling broker a stop order? Sure. All the time. Was it information I could use? Rarely. What difference does it make if I know theres a sell stop down at 15 on a 100 lot if the 16 bid is good for 2000. For starters few large traders use hard stops. Institutions are mostly hedgers/basis traders, so they don't care about direction.
Those times when the market is really lifting off on short covering, fading stops is a losers game. I can't tell you how many times I'd be long 80 contracts as buy stops were being hit and as I was sitting pretty with the market going 5 bid, 6 bid, 7 bid a broker would ask, "Pabst are you at eight?" I'd say sure and he'd buy some ridiculous amount like 400 and I'd turn a 5 tick winner on 80 (400 ticks) into a 960 tick loser as I get jammed on the 320 shorts.
Irregardless that's NOT the issue of this thread. Other than your clearing firm, I doubt anyone knows what stops are residing on the ECBOT server. The issue is simple. As market sell orders are auctioning the market lower and setting off sell stops, the computer knows to do nothing other than downtick those stops into corresponding bids. If there's even ONE less bid in the system than the number of sell stops the market will cascade lower until buyers spot the opportunity to bid. Even then buyers are reluctant because we've seen time and time again instances where the Exchanges will bust buys outside of the "fair value" range leaving those buyers, who were actually supporting the market by supplying liquidity, out in the cold.
Those times when the market is really lifting off on short covering, fading stops is a losers game. I can't tell you how many times I'd be long 80 contracts as buy stops were being hit and as I was sitting pretty with the market going 5 bid, 6 bid, 7 bid a broker would ask, "Pabst are you at eight?" I'd say sure and he'd buy some ridiculous amount like 400 and I'd turn a 5 tick winner on 80 (400 ticks) into a 960 tick loser as I get jammed on the 320 shorts.
Irregardless that's NOT the issue of this thread. Other than your clearing firm, I doubt anyone knows what stops are residing on the ECBOT server. The issue is simple. As market sell orders are auctioning the market lower and setting off sell stops, the computer knows to do nothing other than downtick those stops into corresponding bids. If there's even ONE less bid in the system than the number of sell stops the market will cascade lower until buyers spot the opportunity to bid. Even then buyers are reluctant because we've seen time and time again instances where the Exchanges will bust buys outside of the "fair value" range leaving those buyers, who were actually supporting the market by supplying liquidity, out in the cold.
Quote from Silversea:
Regardless of any fancy high tech entry systems, in the Pit, the boys standing there physically, really know what's going on( including the large accumulation of stops) and therefore can very easily manipulate the market.
But of course they(Exchanges) will never tell you that. The can do no wrong EVER.
YEAH Right!
Looking at the bigger picture here .. if indeed ecbot market maker software doesn't prevent such a meltdown in parallel market - ZI versus SI - then it should be possible to manipulate the ZI market to one's advantage even with relatively small account size. In general SEC or CFTC steps in when market manipulation occurs, however, if this is kosher then I see no problem in pursuing this as a trading strategy. To trigger such a an event one needs to only look into the bids stack making sure you have enough margin to hit a majority of them. Only thing to figure out is how far you want to go and how many percentage wise you need to hit.
BTW: Some posts were indicating ZI as a mini version. This is not the case - ZI contract is very similar to SI - it is not the mini version of it.
BTW: Some posts were indicating ZI as a mini version. This is not the case - ZI contract is very similar to SI - it is not the mini version of it.
A few fallacies are present in your reasoning. First off: the CBOT is not a "market maker." they're merely a "matcher" or facilitator for buyers and sellers to meet at a price.
Secondly, just because you "clean out" the book in Z1 doesn't mean that you'll trip off any where near enough stops to cover your position. Most of the time SI traders or electronic spreaders will say to themselves, "oh some stupid jaggoff is offering Chicago a dime lower than New York." They'll then lift you and you'll be chasing the market back to cover those crappy shorts.
Secondly, just because you "clean out" the book in Z1 doesn't mean that you'll trip off any where near enough stops to cover your position. Most of the time SI traders or electronic spreaders will say to themselves, "oh some stupid jaggoff is offering Chicago a dime lower than New York." They'll then lift you and you'll be chasing the market back to cover those crappy shorts.
Quote from rsteelman:
Looking at the bigger picture here .. if indeed ecbot market maker software doesn't prevent such a meltdown in parallel market - ZI versus SI - then it should be possible to manipulate the ZI market to one's advantage even with relatively small account size. In general SEC or CFTC steps in when market manipulation occurs, however, if this is kosher then I see no problem in pursuing this as a trading strategy. To trigger such a an event one needs to only look into the bids stack making sure you have enough margin to hit a majority of them. Only thing to figure out is how far you want to go and how many percentage wise you need to hit.
BTW: Some posts were indicating ZI as a mini version. This is not the case - ZI contract is very similar to SI - it is not the mini version of it.