6years ago, there was a major study on relationship between future & Stock price. The conclusion was;
1. Future & Stock gap time is about 2 sec
Why? When maket makers receive an order(large amounts) from major institutions like Merill or mutual fund companies, the market makers' firm immediately buy on future, & excute the institution order.
2. Major trading firm already knows the co-relationship between future & stock price. Bright trding firm who excute 4% of NYSE daily, have a live broadcasting future market system at their trading offices to beat the 2sec gap between future & stock. The real time future quote always late compare to live broadcasting of Future exchange floor.
After all, those professional traders always buy & sell in 30 sec for 4 cents profit. So, the 2 sec gap makes the difference of profit or loss
1. Future & Stock gap time is about 2 sec
Why? When maket makers receive an order(large amounts) from major institutions like Merill or mutual fund companies, the market makers' firm immediately buy on future, & excute the institution order.
2. Major trading firm already knows the co-relationship between future & stock price. Bright trding firm who excute 4% of NYSE daily, have a live broadcasting future market system at their trading offices to beat the 2sec gap between future & stock. The real time future quote always late compare to live broadcasting of Future exchange floor.
After all, those professional traders always buy & sell in 30 sec for 4 cents profit. So, the 2 sec gap makes the difference of profit or loss