Spread on Platinum Futures /PL

A

Actuarial_Fun

Could someone help me understand why the Bid/Ask spread on /PL has increased so much since the drop to ~700.

A few months back when /PL was around 1100, I believe the spread was a few ticks. Now, the spread is significantly more. Given it has decreased in price, and therefore each tick is worth more in bps, I would think the spread would at least stay the same, if not tighten.

I'd appreciate someone explaining this to me. Thanks.
 
Beginning in late Feb - futures has had a liquidity crisis effecting even the the most liquid of instruments. The book depth has fallen off by a mile and the spreads have widened - even after the Feds QE infinity.

Here is the CME statistics trading 1 gold contract, they don't keep stat's for PL. Note how the book liquidity has dried up and the cost to trade has sharply risen.


upload_2020-4-4_8-36-9.png


upload_2020-4-4_8-39-11.png


https://www.cmegroup.com/tools-information/cme-liquidity-tool.html#cmeLiquidityContainer
 
From my colleague, John Thorpe:
Open Interest has declined precipitously



upload_2020-4-5_17-27-17.png



Prices are back to 2003 levels


With fewer market participants , liquidity profiles change significantly and bid offer spreads reflect that.

That doesn’t mean they are not tradeable, it simply means you need to expect to be more patient with your orders and trade specific price levels.

The Platinum market is not one to daytrade , nor would I have ever recommended it as a day trading vehicle.
 
Actuarial_Fun said:
Thank you both for the information! Is there a reason the liquidity has dried up so much over the years? Thanks.
More...


Past few weeks,
market condition changed significantly.
market has been moving violently and
bid offer spread widened significantly.

There are many futures where spread has widened.
India Nifty Index Futures is one of them where spread has widened by 5 to 10 times.


I am not sure about the liquidity thing.
Look at it this way;
last time for price to go from this to that level, it took X volume to move it.
With such violent market, it took just a tiny little volume to move it.

These are the characteristics of a violent market (due to covid crisis).

If you do day trading, wide spread will impact on your trading.
Chances of getting stopped out is high.

When market cools down, spread will shrink.
 
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