‘Liquidity is terrible’: poor trading conditions fuel Wall Street tumult

Dimitar Kirchev

Dimitar Kirchev

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“It is a frustration,” Jordan Sinclair, a research director at hedge fund Capstone, said of the lack of liquidity. “The global financial crisis was a failure of the banking industry. They took too much risk and gave too much leverage and it made sense for the regulators to make sure that could not happen again. But there are consequences.”

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Dimitar Kirchev said:
“It is a frustration,” Jordan Sinclair, a research director at hedge fund Capstone, said of the lack of liquidity. “The global financial crisis was a failure of the banking industry. They took too much risk and gave too much leverage and it made sense for the regulators to make sure that could not happen again. But there are consequences.”

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FB + TGT both had big problems with earnings+ customer service+ big bear trends; but the good news is capital markets punish that bad behavior.....................................................
 
Dimitar Kirchev said:
“It is a frustration,” Jordan Sinclair, a research director at hedge fund Capstone, said of the lack of liquidity. “The global financial crisis was a failure of the banking industry. They took too much risk and gave too much leverage and it made sense for the regulators to make sure that could not happen again. But there are consequences.”

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The reason liquidity is so poor in stock index futures is due to the quadrupling of stock index futures margin. Just 3 years ago margin for 1 sp500 Emini contract was $3500.00 now it's $12k just to hold overnight. Some brokers charge much more. Millions of small traders have been priced out of the markets.

Just like first-time home buyers are priced out of the housing markets.
 
Rickshaw Man said:
The reason liquidity is so poor in stock index futures is due to the quadrupling of stock index futures margin. Just 3 years ago margin for 1 sp500 Emini contract was $3500.00 now it's $12k just to hold overnight. Some brokers charge much more. Millions of small traders have been priced out of the markets.

Just like first-time home buyers are priced out of the housing markets.
More...

I give your post a tentative like, because while I agree with the logic, I don't think that is the foundational issue. Retail folks don't offer as much liquidity as the majors, and they are the real driver of the stocks, which is the driver of the futures.
 
Rickshaw Man said:
The reason liquidity is so poor in stock index futures is due to the quadrupling of stock index futures margin. Just 3 years ago margin for 1 sp500 Emini contract was $3500.00 now it's $12k just to hold overnight. Some brokers charge much more. Millions of small traders have been priced out of the markets.

Just like first-time home buyers are priced out of the housing markets.
More...

The real reason is money was too easy to come by for the big guys, they haven't had to work for it for decades.

Now when it's hard, they want to hoard it.
 
Rickshaw Man said:
Millions of small traders have been priced out of the markets.
Just like first-time home buyers are priced out of the housing markets.
More...

In this volatility small traders can trade micro SIFs. Much smoother scalability for small traders as well.
If you start with 4 or 5 micro lots you can add more lots as your profits grow without seeing an abrupt jump in risk.
Going from 1 e-mini to 2 e-minis is a big jump in position size and risk.
 
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there is absolutely no degradation in NQ daily volume. it averages 500k / day.
 
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In fact, it has been increasing since decades ago ( see monthly NQ volume chart above).

Trust no one.
Always do your own analysis.
 

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Cannot disagree more with this analysis.

We potentially just marked the top of the historically largest asset bubble that built over the past 20 years (yes, 2008 did not really shake out many weak hands that should have been flushed out of the system). What do market participants expect, liquid organized markets? Markets are less fairly accessible than ever before. Algorithms dominate the market that can pull out at any time yet their firms all enjoy market maker privileges.

To suggest this is the making of regulators is an absolute insult. Very powerful players are screaming and kicking right now and even put their power over journalists to good use to avoid some groundbreaking upcoming regulations that will rewrite the trading and execution landscape for the next 2 decades. That's all there is to it. Hft and hedge funds are absolutely shitting their pants right now. Why not bitch a bit about regulations. Laughable.

Dimitar Kirchev said:
“It is a frustration,” Jordan Sinclair, a research director at hedge fund Capstone, said of the lack of liquidity. “The global financial crisis was a failure of the banking industry. They took too much risk and gave too much leverage and it made sense for the regulators to make sure that could not happen again. But there are consequences.”

https://www.ft.com/content/cbc47bbf...traffic/partner/feed_headline/us_yahoo/auddev
More...
 
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