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Change the tick increment in ES from 0.25 to 0.1
- Thread starter guy2
- Start date
This Elite thread asks the same question but no answer:
http://www.elitetrader.com/vb/showthread.php?threadid=41969
http://www.elitetrader.com/vb/showthread.php?threadid=41969
I have spoken with many traders who have taken thousands of trades. When we analyzed our profit per trade it was remarkably similar to the spread. Even though we had many different approaches to the market. If you trade a lot you are probably basically capturing the spread.
Also the wider the the spread the the more risk involved in the trade. For arbs and market makers. This gives opportunity to the little guy as well as other industrious traders. You want arbs to be able to squeeze every last trading dollar out of the market... decrease the spread in the es.
I would also argue you that when you increase risk in a trade you increase the range. You want opportunity, you like range.
The wider the spread the better the trading for good traders.
Also the wider the the spread the the more risk involved in the trade. For arbs and market makers. This gives opportunity to the little guy as well as other industrious traders. You want arbs to be able to squeeze every last trading dollar out of the market... decrease the spread in the es.
I would also argue you that when you increase risk in a trade you increase the range. You want opportunity, you like range.
The wider the spread the better the trading for good traders.
Quote from candletrader:
It won't make any difference to any non-scalping strategy...
I agree, I even prefer it this way as it's simply easier to choose your entry point. It's pretty hard to do this with YM and ER2 because there are just too many ticks... That's good for a scalper, but for others not necessarily so.
Quote from guy2:
I've been using google to try and find the answer to the question "why is the ES tick size 0.25?" and am amazed that I can't find an answer, yet...
Remember, the S&P used to be a $500.00 per handle contract, that wound-up getting cut in half to 250 times the Index.
Therein lies your answer.
I agree jem. There's no reason why we shouldn't be able to bid/offer on any reasonably divisible price. If the market is trading at 1230.0 - 1230.1 then there is no reason why we can't push to the front of the queue and offer 1230.09. The next person to hit the buy would get a lower price and you would have facilitated a tighter spread.
For practicle purposes your DOME/DOM window would have to group size at round prices but that could easily be configurable.
For practicle purposes your DOME/DOM window would have to group size at round prices but that could easily be configurable.
Quote from Apex Capital:
Remember, the S&P used to be a $500.00 per handle contract, that wound-up getting cut in half to 250 times the Index.
Therein lies your answer.
Perhaps it's late and my brain has disengaged - I still don't understand why the ES ended up being 0.25 points per tick instead of 0.1 given what you've just said...?
Quote from electron:
I agree, I even prefer it this way as it's simply easier to choose your entry point. It's pretty hard to do this with YM and ER2 because there are just too many ticks... That's good for a scalper, but for others not necessarily so.
You could get a custom made trading platform that could group the bid/ask in the YM and ER2 into a coarser grainularity which would simulate the what the ES is to the SP.
Market Profile traders do this already in both directions: i.e. simulate a finer and coarser profile than the market actually trades at.
Quote from guy2:
Perhaps it's late and my brain has disengaged - I still don't understand why the ES ended up being 0.25 points per tick instead of 0.1 given what you've just said...?
The big S&P contract effectively trades in .20 increments. I think if someone on the floor stepped in front of everyone for a mere dime, he'd get his head taken off.
I reread what I stated. I would like to modify my statement to say that on the other end of the spectrum a spread can get to wide so that the only people who want to participate are the ones with inside information. So I like wider spreads as long as it is not so wide as to cut down particpation.
Basically the spread should have some value in relation to the size of the contract.
There was a thread here where somebody said they do not sell cars in pennies. Neither should the sell a car on the floor (merc) in pennies. I agree with that guys logic.
Basically the spread should have some value in relation to the size of the contract.
There was a thread here where somebody said they do not sell cars in pennies. Neither should the sell a car on the floor (merc) in pennies. I agree with that guys logic.