Importance of non- commercial participants in the market

[zdreg]

https://www.theice.com/insights/exchanges/why-financial-participants-matter-to-the-commodity-markets.

 

[sridhga]

https://www.theice.com/insights/exchanges/why-financial-participants-matter-to-the-commodity-markets.

In that research paper, there was an equation mentioned. F=S+I+C. This equation ignores perceived changes to demand and supply in the future. So the equation should be like F=S+I+C+ Future Increase/(Decrease) in demand+Future Decrease/(Increase) in Supply

 

[spy]

Political will for price controls seems to be on the rise and this is the type of communication that's needed to stem it.

 

[schizo]

From the article:
[T]here have been time and again voices that blame “speculators” for high prices and volatility. These voices tend to grow louder when prices are high and claims are often made without evidence that speculative activity has moved markets away from their fundamentals by distorting prices and exacerbating volatility. In this paper, we shed light on the critical role that financial participants and liquidity providers play in the proper functioning of futures markets as enablers of price discovery and risk transfer, and how this benefits all participants by boosting liquidity and reducing transaction costs.

True, in general, "speculators" (both humans and bots) do help with liquidity and price discovery, but consider what happened in ES futures today, soon after the release of CPI. Price shot up over 150 points in JUST 2 MINUTES!! That's just effed up, no matter how you slice it.

So even though speculators are important part of market mechanism, they are also the cause for massive frenzy.

 

[murray t turtle]

True, in general, "speculators" (both humans and bots) do help with liquidity and price discovery, but consider what happened in ES futures today, soon after the release of CPI. Price shot up over 150 points in JUST 2 MINUTES!! That's just effed up, no matter how you slice it.

So even though speculators are important part of market mechanism, they are also the cause for massive frenzy.

%%
Exactly.
Panic selling is also caused a lot by funds that have to sell\
redemptions force the selling.
Certain exceptions apply.
Carl Ichan, had no ''gate'' on his hedge fund in 2008\
but allowed for redemptions, got the money from another fund. Said he did not want to sell, just because of the herd

 

[Overnight]

True, in general, "speculators" (both humans and bots) do help with liquidity and price discovery, but consider what happened in ES futures today, soon after the release of CPI. Price shot up over 150 points in JUST 2 MINUTES!! That's just effed up, no matter how you slice it.

So even though speculators are important part of market mechanism, they are also the cause for massive frenzy.

But specerlators were not the cause of the chaos. It never is with index futures. It was institutional algos. No human is sitting there with the thumb on the "BUY" button on their chart clicking large block orders at the instant the news is released. It takes the human brain a bit of time to process information, and no human brain can process the details of a report like that and in 5 seconds go "Yep, BUY 5000 lots!"

Because those same specerlators would have gotten their asses handed to them when the market quickly reversed after the opening bell.

 

[schizo]

But specerlators were not the cause of the chaos. It never is with index futures. It was institutional algos. No human is sitting there with the thumb on the "BUY" button on their chart clicking large block orders at the instant the news is released.

Re-read what I wrote:

True, in general, "speculators" (both humans and bots) do help with liquidity and price discovery

 

[Overnight]

Re-read what I wrote:

I don't have to re-read it.

If you mean to say that "bots", i.e. institutional algos, are specerlators, I would say NO. They are calculating killing machines with a specific purpose.

 

[schizo]

I don't have to re-read it.

If you mean to say that "bots", i.e. institutional algos, are specerlators, I would say NO. They are calculating killing machines with a specific purpose.

So are the speculators. They're just as calculating and lethal, not to mention that they have a specific purpose. In fact, back in the 80s and 90s, that's all speculators did. They game the market to their advantage.

But then you merely like to argue for the argument's sake, so I'll talk to a wall instead.

 

[Overnight]

So are the speculators. They're just as calculating and lethal, not to mention that they have a specific purpose. In fact, back in the 80s and 90s, that's all speculators did. They game the market to their advantage.

But then you merely like to argue for the argument's sake, so I'll talk to a wall instead.

What kind of volume do you think retail traders are doing on the NYSE these days? The thing has half a billion shares per day. There's no way specerlators are having any effect on that. It's all the institutions which are doing it.