Trading Low-Volume vs. High-Volume securities

T

tenthousandmen

Some securities out there, such as the SI contract (Silver) versus the YI contract (mini silver), have differing volumes and somewhat different intraday price action.

I've noticed that YI is much easier to trade than SI (at least for me). I'm thinking this is because there are almost no market makers in YI since the volume is low, and the leverage works out to basically the same (so who cares to buy mini when you can buy SI).

At the same time, YI has plenty of intraday volume to trade a couple of contracts routinely (roughly 3000 daily volume).




I was wondering what your thoughts are on this. Is this a secret 'trap'? Is it possible to be a MM in lower volume contracts with a small account? Are these lower volume mini contracts easier places to rip the faces off of non-MM's without getting squashed in the process by the bigger guys?
 
Quote from tenthousandmen:

Some securities out there, such as the SI contract (Silver) versus the YI contract (mini silver), have differing volumes and somewhat different intraday price action.

I've noticed that YI is much easier to trade than SI (at least for me). I'm thinking this is because there are almost no market makers in YI since the volume is low, and the leverage works out to basically the same (so who cares to buy mini when you can buy SI).

At the same time, YI has plenty of intraday volume to trade a couple of contracts routinely (roughly 3000 daily volume).




I was wondering what your thoughts are on this. Is this a secret 'trap'? Is it possible to be a MM in lower volume contracts with a small account? Are these lower volume mini contracts easier places to rip the faces off of non-MM's without getting squashed in the process by the bigger guys?
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I understand your question;
some would question even the big silver contract, being big.

But as they say in premarket{stocks with lower volumetime frame};
which way do you want it to go.lol:D Havent traded that contract;
but 2 good general rules in tek analysis follows.
1] Lower volume makes tek analysis more unreliable.

2]Its not necessarily a''trap'', because of low volume;
i enjoyed many a low volume RE market, gaps & plenty of gaps, but i did NOT have to sell or buy... So that may not apply to your trading question.
 
Quote from tenthousandmen:

I'm thinking this is because there are almost no market makers in YI since the volume is low, and the leverage works out to basically the same (so who cares to buy mini when you can buy SI).
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In fact, YI is almost pure market maker since the only people hitting/lifting are noise traders. The MMs posting a bid/ask are just arbing it against the SI, SLV, or other opportunistic silver vehicle.

Hence the (much) wider bid/ask spread.
 
Quote from ogarbitrage:

In fact, YI is almost pure market maker since the only people hitting/lifting are noise traders. The MMs posting a bid/ask are just arbing it against the SI, SLV, or other opportunistic silver vehicle.

Hence the (much) wider bid/ask spread.
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So why would it be easier to trade? :confused: Thanks for the insight...
 
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