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Hi Cliff,
Someone has already presented the argument comparing the mini and the
grains to bang for your buck so I won't rehash that particular argument for
(or against) the mini.
The REAL problem I have with the contract has been the way it has been set
up to trade by the CME. It appears to me that they have set this thing up
in haste and with the intent of increasing volume on Globex without regard
to making it a truely viable contract to the very market they claim to be
trying to reach, the public. Not being able to set stops in the market is a
HUGE problem if one is considering trading this thing. However, all I have
been able to get from CME offcials regarding this issue is that they are
updating the Globex platform sometime in '98 to allow Globex to be able to
deal with the usual types of orders most of us are accustomed to having at
our disposal. In the meantime, the impression I get from the exchange is
that it simply is going to be something they are either going to try and
ignore or suggest that brokers (FCM's) are going to handle stops for their
customers. Well, I can give a number of reasons why even if a broker says
they will accept stops on the mini, it simply will not work and will expose
their customers to an untenable level of risk.
At this point, all any broker could do would be to say, "ok, I'll watch the
market and if hits your stop I'll then go to the market with your order".
Even if your broker was sitting in front of a Globex terminal (which they
don't allow brokers to have anyway), in anything resembling a fast market
you are TOAST. Now, since your broker isn't sitting in front of a Globex
terminal not only are you toast, you (your account) are VAPORIZED by the
time your "stop" order hits the market! A few other minor details include;
How are multiple orders, all at different price levels yet only a quarter
point or so apart, possibly going to be efficaciously handled by someone
"watching" the market? Who is responsible (accountable) for fills? Be sure
and ask anyone claiming to be willing to accept your stop orders these
questions. It is simply not practical and most certainly not in the best
interest of the trading public to promote such a claim.
Also, if you have comments you would like to share with the CME, Mr. Rick
Redding is in charge of marketing their index products. His phone number is
312-930-3373. I'm sure he'd love to hear from you.
It will be interesting to watch the volume in the mini after the
introduction of the CBOT contract based on the Dow on Oct. 6.
One last thing. The commission schedule included in your post was VERY
high. If interested in considerably better rates contact me privately.
Regards,
Tom Alexander
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> From: Cliff Scheller <cliffsch@xxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Re: FUTR S&P MIni commissions
> Date: Tuesday, September 23, 1997 10:40 AM
>
>
> > Shane Wisdom wrote (re ct./month):
> > > commish schedule:
> > > 0-20 = 34.50
> > > 21-50 = 29.50
> > > 51-80 = 25.50
> > > 80-100= 21.50
> > > over 100= 19.00.
> > > This is how I work it....it's very competitive if you shop around.
>
> WOW. Is this typical, or an outlier?
>
> This is just more evidence that the mini is absolutely THE BEST thing
> that the industry has invented in years to take the little guy's
> money. And it will, nice and slow, but with certainty, in the high
> majority of cases.
>
> This also a great place to apply risk of ruin calculations. Given the
> slippage, commission, and tic size, against statistical range and
> profit per big point of movement, a SUPER-performing system is needed
> to insure against total bankruptcy. And if you have a system that is
> that good, you would be foolish to trade the mini.
>
> IMHO, the industry was just salivating at all the wannabes who
> didn't have the money to trade the hi-margin spoos, but desparately
> wanted to be a part of the "action". Wannabes LOVE the spoo, 'cause
> it represents the hot action, instant effort-free riches, and
> lifestyle which they believe awaits them as futures traders. And, of
> course, the industry longs for the ones that did have the money,
> traded the spoo a few times and blew out. The industry got $45 and
> fees, while the customer lost $4K. That is not good. It is better for
> the $4K to go to the industry.
>
> So, the industry has filled a need that the market presented. <g>.
>
> Anyone considering trading the mini-spoo with high commissions and
> without an absolutely STELLAR edge and profit expectation should just
> write a check to their favorite charity instead.
>
>
> Cliff
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