Hello @garachen, I read that you traded equity index volatility.
In Europe, market makers quote OTC products for retail, based on the major equity index futures. Recent regulatory changes capped the leverage available in these products which significantly limited turnover and profits for the providers. The providers are trying to drum up business in ways which may give up edge.
1) as the leverage restrictions don't apply to long options, providers are quoting options with a daily expiration on what seem like unrealistically tight spreads e.g. 2 YM points wide for a daily option. You can hit both sides of their quotes but doubt retail ever short as it needs hundreds of times the capital on deposit for the same delta. And the spread widths are fixed. This may make their desk substantially short gamma, which may be hard to hedge in that duration. Maybe they just book it. Settlement rules make their daily OTC product identical to the exchange traded product on the last trading day. I can see that this could be used in times of panic but wonder if there are more sophisticated volatility plays available which could make use of a 'cheap' leg.
2) providers quoting equity markets tighter than the underlying, e.g. 0.1 of a full ES point with no fees, good for (multiple clips of) 20 lots. If I had a strategy which filled passively in e.g. a volatility structure which used ES as a hedge and went to market on the ES leg then this could save 0.15 ES points plus the fees.
3 of these OTC providers used to have significant turnover such that they wouldn't notice/act on mispricings until someone had taken mid six figures from their book, likely with more than 1 customer doing the same trade. Historical examples included poor vol models in FX digitals and incorrect basis in back month commodity products. So while these opportunities may not interest you personally, they seem to fit the 'Path to Profitability' concept in building from e.g. 30k to 300k in order to buy down fees in futures or gain a meaningful return from opportunities in cryptos.
ne younger trader said ''day trading??'' NOT really , but not all eod also....................................................................................................Exspect more errors/slippage ,,,,,,,, on 5 minute chart than >>5 hours even if you get perfect data + you will not get perfect data.