The changing character of the Futures Market brought about with the introduction of Micro contracts.

ElectricSavant

ElectricSavant

Much of the Futures market is Hedgers mitigating their risk...then there is the HFT computer models providing liquidity and siphoning off excess. I believe that the retail traders will increase their part in the market movement of the future indexes as they shift out of their ETF's over to the Micro-Futures ($4.569 trillion by November of 2017)

This is just a thought and I wanted to throw it up on the ET wall for comment.

ElectricSavant
 
If I were a day trader, focusing on broad-based indexes, I would only trade futures. The size of the contract would depend on the size of my account and what I want to risk on each trade.

I do not find your comment of HFT material. There are HF market makers in all liquid symbols. They are there to make money by keeping pricing inline when out of line. They should not determine if you get to make money. In fact, without them, there would be less depth and liquidity for you to trade with. Do you really want to wait for another customer to want the other side of your trade at that price and second in time each time you want to play? You need them more than you know.
 
The general public does not understand futures. It's kind of like options. The instruments themselves are complicated.

The material advantages of Micro's over an ETF, like capital efficiency, ability to fine tune notional exposure, spread risk, and trade overnight are probably too complex to be recognized by the general public. These are the same advantages the Mini's have with respect to the cash market.

I don't think there is a scenario where ETF dominance is threatened. For example, micros will never be a destination for 401k funds.

ElectricSavant said:
retail traders will increase their part in the market movement of the future indexes as they shift out of their ETF's over to the Micro-Futures
More...

The micro's are almost completely irrelevant with respect to moving the market.

Total of all U.S. listings is something like $34 trillion. Micro is like $14,000 notional.

In fact, since the US market is 'risk arbitraged' against international equity indexes, the introduction of these instruments, though useful in some ways, is of very little, if any material consequence.

It will probably shake up the 'dealing desk' FOREX business and maybe the binary options, spread betting, and even CFD brokerage businesses. Kind of interesting to see that play out. They are competitive with these instruments in some ways, less so in others.
 
Before the advent of hft, market participants could perfectly well execute orders and get filled. And no, market makers did not generally rip off poor retail before the Holy Saint Hft arrived. Trading ETFs where possible is way cheaper and less complex than trading futures.

Robert Morse said:
If I were a day trader, focusing on broad-based indexes, I would only trade futures. The size of the contract would depend on the size of my account and what I want to risk on each trade.

I do not find your comment of HFT material. There are HF market makers in all liquid symbols. They are there to make money by keeping pricing inline when out of line. They should not determine if you get to make money. In fact, without them, there would be less depth and liquidity for you to trade with. Do you really want to wait for another customer to want the other side of your trade at that price and second in time each time you want to play? You need them more than you know.
More...
 
Real Money said:
It will probably shake up the 'dealing desk' FOREX business and maybe the binary options, spread betting, and even CFD brokerage businesses. Kind of interesting to see that play out. They are competitive with these instruments in some ways, less so in others.
More...

Every regulatory body is fighting to lower leverage on the instruments you mentioned, so some will migrate to Futures and Micros.
The latest proposal to lower leverage was ASIC in Australia.
 
Yea, It's funny. I remember when CFTC passed a law saying that all regulated FX brokers would have to reduce leverage for U.S. customers. It was a move to try to clamp down on the abuses that can occur when there is no real exchange and clearing.

My first ever real look at trading was when a coworker from the UK had an IBFX account. I remember reading that they were offering 400:1 leverage on the majors! I was like wow this is insane. I remember trying to tell the guy about the USDX and that he should be watching it.

He was taking daily charts flipping them over and attaching to the right side of the previous days chart (some kind of continuation strategy i guess). I was thinking to myself "Hmm if THIS guy can do this then I'm gonna be RICH!"
 
MattZ said:
Every regulatory body is fighting to lower leverage on the instruments you mentioned, so some will migrate to Futures and Micros.
The latest proposal to lower leverage was ASIC in Australia.
More...
Where can I find out more about the USDX and margins needed to day trade it ?
I am UK based.
 
toby400 said:
Where can I find out more about the USDX and margins needed to day trade it ?
I am UK based.
More...

You are just better of (in my opinion) trading on the CME the Euro Currency and Yen that constitute the majority of the index.
I believe the USD index margins are about $2K (of course subject to change by the exchange)
Also, ICE rates for data are expensive. Here is some info, just in case: https://www.theice.com/products/194/US-Dollar-Index-Futures
 
Matt since Futures are new to me, could you be so kind as to provide a link to the CMA currency you mention? Is it the Euro/yen you speak of?
Thanks for your reply matt
 
MattZ said:
You are just better of (in my opinion) trading on the CME the Euro Currency and Yen that constitute the majority of the index.
I believe the USD index margins are about $2K (of course subject to change by the exchange)
Also, ICE rates for data are expensive. Here is some info, just in case: https://www.theice.com/products/194/US-Dollar-Index-Futures
More...
Matt since Futures are new to me, could you be so kind as to provide a link to the CMA currency you mention? Is it the Euro/yen you speak of?
Thanks for your reply matt
 
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