It's risky just driving a car down the street!
It's how you manage the risk with futures.
http://www.proedgeonline.com/joebarry/default.asp
It's how you manage the risk with futures.
http://www.proedgeonline.com/joebarry/default.asp
misconception about futures
- Thread starter sabena
- Start date
STEVET's post on the bottom of page 3 is the most sensible statement to come out of this thread to date.
Any viable futures contract works because of commercials that are basis trading.
Refco comes into the S&P pit to sell x cars down to price y, because he just got hit on 250,000 shares of General Electric in a moderate-size block trade with Goldman-Sachs, and he wants to be long the fair value index spread at that particular level.
Cantor buys 500 TY notes up to price x, because he just got lifted on $50M of the 02/2010 cash issue at price z.
Williams sells 100 June NG down to price x because the price x is 15% above his Henry Hub delivery cost, and he is locking in profit on part of his deliverable.
Trust me, this stuff goes on all the live-long-day.
Slippage and leverage in these heavily arbed markets is not an issue. In fact, commercials typically go to the futures FIRST, because execution is cheaper, and you can get more size off because some big dumb local in Chicago will take a thousand-lot in the Notes. All of the commercials have booths on the floor, with direct lines to brokerage clerks in the pit with headsets, or they flash orders to the brokerage clerks.
Any viable futures contract works because of commercials that are basis trading.
Refco comes into the S&P pit to sell x cars down to price y, because he just got hit on 250,000 shares of General Electric in a moderate-size block trade with Goldman-Sachs, and he wants to be long the fair value index spread at that particular level.
Cantor buys 500 TY notes up to price x, because he just got lifted on $50M of the 02/2010 cash issue at price z.
Williams sells 100 June NG down to price x because the price x is 15% above his Henry Hub delivery cost, and he is locking in profit on part of his deliverable.
Trust me, this stuff goes on all the live-long-day.
Slippage and leverage in these heavily arbed markets is not an issue. In fact, commercials typically go to the futures FIRST, because execution is cheaper, and you can get more size off because some big dumb local in Chicago will take a thousand-lot in the Notes. All of the commercials have booths on the floor, with direct lines to brokerage clerks in the pit with headsets, or they flash orders to the brokerage clerks.
And with the E-mini futures your stoploss
is almost respected + or - .25 points,
there is ALWAYS tremendous liquidity.
The cumulative size 5 levels deep is around
1000 contracts.
Even when you are trading 250 contracts, no
problem.
No market makers backing away when everybody
tries to get through the same door...
is almost respected + or - .25 points,
there is ALWAYS tremendous liquidity.
The cumulative size 5 levels deep is around
1000 contracts.
Even when you are trading 250 contracts, no
problem.
No market makers backing away when everybody
tries to get through the same door...
