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FYI: Here are some comments from a friend of mine who leases a seat
on the Merc and trades the e-mini from a Globex2 terminal just
outside the pit.
Gary
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I wondered what the public thought of the recent spikes. Sorry to
say there is no great conspiracy here. They were plain old screw
ups. Actually, smaller spikes happen a couple of times a day, but
they may only move the market 150 points or so. The two recent
spikes were the result of a careless order entry clerk upstairs in
the Merc building and the other was a newer floor trader who meant to
buy 20 and instead bought 200.
Most floor traders have seen these mistakes in the past and several of
my fellow traders 'work' 10 or 20 lots, 200 points above and below the
market hoping to get hit if a mistake happens. The downside to this
strategy is that usually the 'spike' trades are busted later in the day.
This can really hurt someone like me who thought he sold an emini at 9:00
in the morning only to find out at 10:45 that the trade has been busted
and I have to sell one 600 points lower than where we were at 9:00.
There is a committee on the floor that immediately works on the
problem, but the process can be very time consuming and distracting
for any of the traders involved. Don't ask me what the rules are,
but a 200 lot racing through any and all offers pushing the market 10
handles out of line for a split second effects a lot of people. No,
there is no way for me to take advantage of it because it happens so
fast. These spikes also trigger stops which just compounds the
problem.
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