Confused about Real-World Farmer's Commodities
- Thread starter Wait4proof
- Start date
Yesterday, I started this thread out of curiosity - To quote myself:
So I signed-up on a Farmer's Forum and asked my questions there:
https://thefarmingforum.co.uk/index.php?threads/hello-farmers-im-a-day-trader.190124/
A day later, and my initial curiosity has now turned into a negative opinion against Futures Traders. To quote a Farmer named Jackov Altraids:
I guess my new question here would be, "Why pick Futures to trade?"
As in, "Is there a moral dilemma to trading Ag Futures?"
Later in the day, I realized that I was asking my questions in the wrong forum.
So I signed-up on a Farmer's Forum and asked my questions there:
https://thefarmingforum.co.uk/index.php?threads/hello-farmers-im-a-day-trader.190124/
A day later, and my initial curiosity has now turned into a negative opinion against Futures Traders. To quote a Farmer named Jackov Altraids:
Wow!
I guess my new question here would be, "Why pick Futures to trade?"
As in, "Is there a moral dilemma to trading Ag Futures?"
The real beef that those producing the commodities have is with the CME & the predatory HFTs. Check out this letter sent to the SEC by the National Cattleman's association.
From looking at this forum it does not seem like many trade the softs/agriculture products anyway. Besides we are the dumb money.
Farmers trollin - sounds like a good rock band name?
http://pointsandfigures.com/2016/01/23/the-national-cattlemen-say-markets-are-broken/
From looking at this forum it does not seem like many trade the softs/agriculture products anyway. Besides we are the dumb money.
Farmers trollin - sounds like a good rock band name?
http://pointsandfigures.com/2016/01/23/the-national-cattlemen-say-markets-are-broken/
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W4proof; partial answer on a complex question.
NO, because many US farmers have fuel tanks/large fuel tanks+ gas /diesel is going down now.
And not sure if gasoline went up at all in Arabia, but dont really know. I do know a Chinese reporter asked the Chicom gov [ public record]''why did you change the name of swine flue?? The Chinese gov said ''pork is big business, next question. ''
LOLBy the way Mr. Gumby, there's a great response in there by some user named "KIM", reposted here...
"I could write 1000 pages on this article. First, the letter to Chairman Duffy is accurate and well stated. The problems faced by legitimate hedgers are vast and nuanced. Yet, they all have the same cause. And, they all came about for the same reason. The cause is the demutualization of the exchange. This shifted the paradigm from one that served the customer to one that ignored the customer to serve the shareholder.
When this happened, one statistic was revered like a deity. It became the end all, be all. That stat is Volume. The exchange was obsessed by volume. Employees were compensated for increasing volume. Revenue and shareholder value relied upon growing volume. They even went so far as to intentionally mislead the trading public by positing that greater volume meant increased liquidity. That would be like saying homeowners would be better served if multiple real estate brokers should be paid to better facilitate transactions between the home's buyer and seller. It's bullshit.
In order to grow volume in markets that are limited by size of the underlying physical commodity, the exchange had to woo new participants into the market. They offered them everything under the sun to get them to trade agricultural products. Put bluntly, they changed the rules and policy so that these new players were guaranteed to make money. All, they had to do was spend the most on technology. This hurts market liquidity and integrity for a few reasons. The first and most obvious is the issue of risk. Because they get first right of refusal on all orders, HFTs never have to take their foot off first base before the other one is firmly planted on second. This is not sour grapes that the big boys are able to make tons of money. It is pointing out that the current system undercuts the primary reason that futures exchanges were created. To transfer risk! When no risk is taken, no service is provided.
The second is the expense and ubiquity of these HFT prop shops. People lie when they tell you that electronic trading is less expensive. When I started trading, my overhead was a Bic pin (pilfered from Burlington Bank if I recall) and a deck of trading cards. Now, to be competitive in the race to Zero, trading firms must spend millions, if not tens of millions, to have a shot at seeing bids and offers before they've already been traded against. When your overhead is a pen and paper, you're happy to make 5 grand a day by capturing the edge on opening and closing orders. When your nut is six or 7 figures, you have to steal a ton of money to cover those expenses. The customer orders are getting hosed. Because they need to be to pay for this new arms race. Even worse is that one system can be employed over every single product listed on a given exchange. Sure, there were lots of bad eggs. We can all name guys who took no risk, provided no service, and made a career out of bagging trades. But, these miscreants were limited by geography, time, and space. They could only bag orders with the brokers who were in the length of their arms and their voice. Now, a particularly unethical computer program can front run and steal every customer order in every market. This is why trading rights are worth so much less than they once were. Sure, a yellow badge allowed you to trade in any pit. But, you had to walk into that pit. And, you can only stand in one pit at once.
These problems have a simple cause and a simple solution. The cause was the manner in which electronic markets were created. Electronic markets were not engineered to replicate open outcry. Emphasizing the structures which worked and eliminating its weakness and inefficiencies. Instead, they were engineered to do one thing. INCREASE VOLUME. Accommodate as much volume as possible in as little time as possible. Transactions mean money. Revenue means shareholder value. So, they tried and succeeded in building a platform that could accommodate millions of transactions per second. Too bad, markets don't run like a factory.
The reason electronic markets have gone so far off course, without attempting to replicate the time tested, proven positive market structures we had in the pit is because electronic markets never had to compete with the pit. Electronic markets did not come about because they competed against and defeated open outcry. Not even close. They were shoved down the throat of customers. Settlements were uilaterally moved to the screen from the pit. Market Reg no longer regulated behavior which hurt the customer. They penalized behavior that made the pit viable. They basically fined people for making pit trades. It was intentional, unethical, and widespread. I can tell you from personal experience that CME's Director of Market Reg spent years and hundreds of thousands of dollars prosecuting me because I made markets in the pit that were more competitive than those available on the screen.
They had a mandate to kill the floor and switch to electronic trading. And, they bullied and intimidated anyone who tried bringing value to the floor. In no way am I saying that open outcry is superior to electronic trading. But, I can say with absolute conviction that electronic trading in its current form is vastly inferior to Open Outcry. The reason is because it never had to compete with open outcry.
What is the answer? You're on the right track. Things need to be slowed down. After all, every customer order should be auctioned off to a community of risk taking, market making, self financed, independent traders. It is impossible to hold a fair,competitive auction in a nano second. Imagine if you were selling a painting through Sotheby's. And the auction ended before the curtain had even been lifted. That's what is happening to customer orders. We don't need to create speed bumps and circuit breakers. We had the best circuit breakers in the world. Our brains and our eyes. Markets never moved faster than the human brain could register and react to what its eyes were seeing. Go back to humans clicking mouses. Problem solved. If you want to get technical, then go to a system of batch trading.
Then reduce the hours. Greater hours means more exposure for the real risk takers and more opportunity for exploitation by the real front running scum bags.
I've got the capital, the connections,and the resources to make all of this happen. But, I'm tired of dealing with the rampant incompetence, negligence, and corruption that pervades Market Regulation. Our exchange ceased being a Self Regulated Organization the day Dean Payton took over those operations. SRO means traders regulating traders. Now, we have hired thugs trying cases before a kangaroo court. No oversight. No justice. Just a bunch of mediocre lawyers, who've never seen a floor, never made a trade, who are paid to collect more in fines than they take in for salary. The morons on BCC are bought and paid for. If they do not vote for the largest penalty, they are not invited back. They do not care about customer harm. They are a censorship board paid to manufacture cases to silence anyone who dares to speak the truth."