Pabst : questions regarding Pit trading
- Thread starter trader89
- Start date
I think I can chime in here. The pits serve essential functions and are much more effective at complex orders (like pack/bundle spreads in ED or even relatively complex options orders) than screen trading, and in my opinion will continue to serve this function forever. What happens is that overtime instruments and trades that were once considered complex and esoteric become common and liquid over time as they migrate to the screen.
Pabst,
Regarding those big locals doing size in the pit, what are they doing on the screen ?
Do you know if they are still pulling big money ?
Or, did they just throw in the towel and retire ?
By the way, how can you read order flow on the screen ?
I tried to follow the euro FX bid and ask on the CME E-quivalents, but I just saw some random numbers going back and forth.
Regarding those big locals doing size in the pit, what are they doing on the screen ?
Do you know if they are still pulling big money ?
Or, did they just throw in the towel and retire ?
By the way, how can you read order flow on the screen ?
I tried to follow the euro FX bid and ask on the CME E-quivalents, but I just saw some random numbers going back and forth.
Well, I run a few automated systems, so the systems are working I suppose. It is hard for a single big local to come up with a complex automated system, since these systems require quants, developers, etc, all are fairly expensive resources, unlike the clerks that could be had in the old days for much cheaper.
While ibanks have fairly sophisticated automated systems, other trading entities like large hedge funds, sophisticated trading firms (like DRW, Wolverine, Getco, Peak6, etc) are also match the ibanks in the automated trading game. From my perspective, it cost a fairly high amount of fixed cost to get into the game, such as infrastructure (data center, direct exchange feeds, etc), system development, strategy analysis, etc. Hence the world of high frequency automated system is not that big, substantially smaller than the "big locals". However, once such platform is in place, it gets easier to trade more products, for instance, it is not uncommon for an automated market maker in option markets that MM for 50-100 names, impossible in the open outcry environment.