What are the commonly used methods that may cause intraday price fluctuations?
- Thread starter Zestilio
- Start date
There are no Market Makers in futures markets. Futures markets trade very close to cash markets so unless it becomes huge down day where volume dries up in futures are only times where arbitragers would gain an edge between stocks and futures. I doubt other than "Fat finger" occurrences that any one or three large traders can control enough contracts to force one direction and make money on the stocks or options.
Technically there's no "market makers" in futures market in similar terms of market makers in stocks.
In contrast, today we have High Frequency Trading (HFT) that's providing what's called passive market making in many futures (not all) through out the trading day but not every instance of the trading day. Yet, depending upon what you're trading and what type of trading style you're using...HFT trading may or may not impact you.
You can easily do you're own in-depth research about High Frequency Trading on Google...thousands of articles and many contradictory to another about the good and bad of HFT and whom they impact or don't impact.
10 to 20 years ago, most would not view HFT as a form of market making considering they were mainly involved with arbitrage. In contrast, today's trading environment, they've added other things to what they do such as passive market making.
Unfortunately, there's the good and the bad with HFT and they are not the only type out their behaving in passive market making.
Regardless, its nothing similar to what you know as market makers in stocks nor is it transparent like market makers in stock. That transparency is a big difference of many other big differences between the two. Anyways, if you don't understand it or it doesn't have impact on your trading style (e.g. swing trading)...nothing wrong with saying there's no market making in futures.
P.S. I've only seen the phrase passive market making about HFT being used only in the past 5 years by quants in the industry. I have not seen it used by us retail traders in description of what they do.
You mean the "big players" or simply put, the players? It's simple trading. Every player has a different goal and strategy. Buying/selling close to the VWAP is one of them.
In my country we can see what individual players are doing. For example, we can see UBS bots rushing 1 tick ahead of big orders a millisecond after the big order is placed. Example:
Current price: 39,400;
Goldman Sachs places sell order of 200 contracts at 39.500;
Several UBS bots instantly place several smaller sell orders at 39,490~39,495.
Speed is their edge.
Also, we can see who is short, who is long and by how much, so when a big player is heavily short, market is rallying and the end of the day is approaching, we can expect him to buy in abnormally big pieces. This often creates reversals in the last 2 hours.
In my country we can see what individual players are doing. For example, we can see UBS bots rushing 1 tick ahead of big orders a millisecond after the big order is placed. Example:
Current price: 39,400;
Goldman Sachs places sell order of 200 contracts at 39.500;
Several UBS bots instantly place several smaller sell orders at 39,490~39,495.
Speed is their edge.
Also, we can see who is short, who is long and by how much, so when a big player is heavily short, market is rallying and the end of the day is approaching, we can expect him to buy in abnormally big pieces. This often creates reversals in the last 2 hours.
I suppose "HFT" is often complained about now, but I believe it was late 80s when S&P Futures and cash were off, program trading was started by computers, could have be done manually before this time period and I recall many didn't like that either. Big government steps in as says at so many points, can't do program trading, but certainly can be done manually, I figure some guy sits at a computer waiting to hit buy or sell all day, what a freaking boring job, another boring job are those guys that do rollovers for the firm, big traders and clients, maybe not so much today with automation.
Whether it is HFT or in the future other ways to get edges, it will never stop, either adapt to changes or quit trading and just complain as so many do.
Whether it is HFT or in the future other ways to get edges, it will never stop, either adapt to changes or quit trading and just complain as so many do.