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Manning:
Again, I am not implying you have a hidden agenda or that you aren't a good
broker. And I even agree that there are people that might benefit from using the
E*minis versus the full S&P contract. But I thought the hype about electronic
trading had far surpassed the truth and some facts needed to be stated. These
facts need to be taken into consideration before someone decides the E*mini is
better or worse for them to trade. The most important fact facing an E*mini
trader is that you cannot use STOPS! And 'at the market' execution cannot be
untilized. I understand that changes in the orders allowed by the exchange may
bring these order types to the E*mini markets. But until they are available to
E*mini traders, trading E*minis when you have access to a good broker that has
floor access makes no sense.
And until full electronic trading is implemented, E*mini traders need to realize
that they are at the mercy of the locals that 'arb' their orders from the
electronic trading consoles to the pits. In other words, until *all* of us trade
during the day using the same electronic system, those that choose to trade
electronically will be at a disadvantage. E*minis trade at the mercy of the full
contract S&P...their price action follows, not leads.
So if I trade a two lot in the normal S&Ps, and my broker charges me $18 a round
turn, it would normally cost me fives time that, or $180 a round turn to trade
10 E*minis versus $36 a round turn to trade 2 S&Ps. And if I trade the 10
E*minis instead of trading the 2 S&Ps, I cannot use stop loss orders or 'at the
market' orders trading electronically. This makes no sense. It costs me more, if
I have a good broker the fills will be worse for the E*minis, and I can't use
good money management or exit/entry techniques.
I don't have an agenda. I just think people should think through some of the
things that are proposed and see the fault of the logic. E*minis are good NOW if
you have a very small account and you can't or don't want to trade a full S&P
contract. They will be better in the future for more of us.
Tim Morge
Manning Stoller wrote:
>
> Dear Tim,
>
> I do trade directly to the floor as you do but I was responding to the 1 or 2 lot
> full size trader, not the size trader.
> I have a strong feeling that there are many smaller size traders on the list and was
> responding to them in my comments about the mini.
> I have no "angle" and no hidden agenda.
>
> Manning Stoller
>
> Timothy Morge wrote:
>
> > Folks on the list:
> >
> > I have no bones to pick with vendors or electronic trading fans or pit traders
> > or brokers. If you've read the lists lately, you know I feel the pit traders and
> > pit brokers at the exchanges have led the parade for the move to fully
> > implemented electronic trading. I'll be sad when the open outcry stops, but I'll
> > be a happier trader.
> >
> > HOWEVER...For any broker to tell this list or any other list that on a
> > consistent basis, you can or will get better fills, faster fills, better
> > service, faster service is just plain hype. At the moment, electronic trading is
> > a good venue for traders that have a smaller account and cannot find a full
> > service broker that allows them pit access. By pit access, I mean that when *I*
> > trade the S&Ps, I dial using my speed dialer. A floor clerk AT THE S&P PIT picks
> > up the phone and answers quoting the current bid and ask of the front month S&P
> > contract before even saying hello. I say, 'Hi, it's Tim...buy XX Sep S&Ps
> > market,' and they flash that order into the pit, all the while quoting me the
> > current prices, then tell me my fill. I am answered and filled in less time than
> > it takes for an electronic order to hit the electronic pad in the pit and get
> > picked up. And this talk of 'better fills' on the electronic services...sorry,
> > it just isn't so. If you are getting poor service from your broker, change
> > brokers. Don't just listen to some guy with a vested interest tell you that all
> > your problems will be answered if you just switch to his new doodad.
> >
> > And if the market is less orderly, you can bet my fill will be faster and the
> > service better.
> >
> > As I said, the day for electronic trading in all the pits is near. But until
> > it's implemented, please don't make these wild claims about electronic trading.
> > It doesn't help the electronic trading cause, because people try it and find the
> > unrealistic claims are just that: Unrealistic. Saying that you will get better
> > fills and better service using electronic services on the Merc and CBOT right
> > now is like saying you'll get better fills and service using the Mid-Am currency
> > contracts instead of the IMM full currency contracts.
> >
> > And similarly, you WILL be paying the extra brokerage if you trade the E-minis,
> > although apparently some brokers will lower their 'low' commisions if you switch
> > over to trade electronically with them. But what rates are they charging? Again,
> > I have no complaints with any brokers--many of my friends are brokers. But when
> > someone claims they will only charge you half the brokerage fees to trade
> > E*minis through them, you had better check their rates relative to other brokers
> > offering accounts of your size similar service. Remember!! It costs a broker the
> > same per contract to clear one E*mini as it does to clear one S&P contract. So
> > their costs are literally five times higher for clearing five E-minis versus
> > clearing one S&P.
> >
> > Last, the E-minis are the tale and the S&Ps are the dog. Currently, you can't
> > get out of your E*mini electronically on a stop. Nor can you enter or exit 'at
> > the market.' When you visit the S&P pits, you can see the thirty or so people
> > that huddle around the E-mini quote stations and arbitrage the orders that are
> > sent to those machines from the brokers off of the exchange floor. Those locals
> > are not going to take the orders off of those machines and fill them UNLESS they
> > are able to make money. That's why they call it arbitrage.
> >
> > Tim Morge
> >
> > IdontgetNo@xxxxxxx wrote:
> > >
> > > Subject: Re: Trade mini instead if regular S&P
> > > Date: Mon, 15 Jun 1998 08:46:55 EDT
> > > From: IdontgetNo@xxxxxxx
> > > To: mstoller@xxxxxxxxxxxxx
> > >
> > > Well I don't know which company your with or from what angle your coming from
> > > but the mini's can never compare to the pit trading. Many times the mini will
> > > print a new low but the big ones never will. Speed? I can place an order for
> > > my clients faster than any computer terminal can. Oh and yes I get my fills
> > > right away. Maybe that's a specialty that I have obtained after being in this
> > > business for 15 years but you must be doing something right if your around
> > > this long.
> > >
> > > Morris
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