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Richard:
Not to quibble...but if I understand what the exchange just reiterated to me on
the phone, your broker allows you to place orders as STOP, MARKET and LIMIT
orders. However, these orders are not recognized by the exchange, since your
broker is synthesizing these orders. I am guessing your broker does this:
You enter a stop-loss order below the market because you are long one E*mini.
When the market trades at your price, your broker enters a limit order or
stop-limit order to try to sell your one E*mini as close to the actual market as
possible. When your order is filled, you get your fill.
That is not the same as a STOP order placed in the pits. Stop orders have a
paper trail and have rules that are subject to arbitration--the orders your
broker allows you to use are not subject to these rules. And in effect, if the
markets get disorderly, you unfortunately may find just how unhealthy this part
what your broker is offering you can be.
Again, I am not casting stones at anyone that has found the E*minis to be a good
trading vehicle for them. In fact, *I* trde the E*minis at times--when I am
portfolio trading smaller amounts of risk, I do sometimes use E*minis, though I
always have that nagging worry about unruly markets and the lack of order tools
available to me.
Last, someone privately emailed me and also told me that his broker offered the
same order types your broker offered, although they were 'synthetic' in nature
[meaning not 'held' by exchange rules]. He also asked if I knew when Globex II
was going to be implemented. I just spoke to a committee member and the target
is still basically September [earliest, late August...latest, October] for full
Globex II implementation. The new system will be designed to accept all the
orders we have been speaking about. The MERC has entered an agreement to use the
same electronic platform the MATIF uses and everyone that has taken classes
using the system seems quite happy with it [I liked it]. You can also expect
some great electronic trading software to be available by then for use in your
personal trading--I've asked permission to describe the best software I've seen
and if I get it, I'll do a descriptive post of it soon. It certainly made me ask
when when when....
Best,
Tim Morge
Richard Davidson wrote:
>
> My broker accepts STOP,LIMIT and MARKET orders on the E mini.
>
> Rich Davidson
>
> ----------
> > From: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>
> > To: Manning Stoller <mstoller@xxxxxxxxxxxxx>
> > Cc: IdontgetNo@xxxxxxx; Omega-list@xxxxxxxxxx
> > Subject: Re: Fwd: Trade mini instead if regular S&P
> > Date: Monday, June 15, 1998 10:39 AM
> >
> > 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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