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The trader who must go through a phone broker who doesn't pickup the phone
on the first ring and then calls the floor is guaranteed to absorb much more
slippage than the trader with either direct floor phone access or electronic
order entry. The trader who executes via a fully electronic system will
virtually eliminate slippage but will have other mishaps including outages.
I've traded the spoo via phone and LeoWeb and the e-mini via LeoWeb and
TimberHill. I know for a fact that a truly fast, electronic system can cut
slippage to zero. Been there, done that week in and week out.
That said, I will add that trading methodology has even more to do with
slippage than order entry. I don't trade breakouts, but those who do will
suffer bad slippage on market orders when they are right and reversals on
market orders when they are wrong.
Earl
-----Original Message-----
From: Tom Stein <comfut@xxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Wednesday, February 10, 1999 7:06 AM
Subject: Re: CL_Signal OnLine & TimberHill down
>Earl wrote.....
>
><because when the systems do work, the
>playing field is more level in execution time with large lot traders who
are
>provided direct floor phone access. There are also psychological reasons
>for trading electronically.>
>
>I agree with Earl regarding the general lack of computer interaction of the
>futures industry.......I will, also, agree about the psychological
>reasons......but will disagree regarding execution time and direct floor
>access...a profitable methodology needs to be able to survive both negative
>and positive slippage.
>
>
>Those who have been trading the SP for awhile come to the realization that
>positive and negative slippage....due to time of order placement or
>liquidity...pretty much are a wash.............
>
>The quotes you are receiving on your machine can be 10-20 seconds behind
>the floor....Go to the pit sometime....especially during a period like
>yesterday's last 30 minutes.........faster than you can wave your hand for
a
>sell....the number could have easily dropped 3.00.................
>
>I find many traders so consumed and upset over getting filled at the exact
>tick on their screen that they completely ignore whether their methodology
>is compatible with extracting money out of the market..........If the
>profitability of your methodology is completely dependent on getting filled
>at the exact price....not allowing for negative or positive slippage....you
>might need to adjust your methodology to match the execution capabilities
of
>the market you are trading..........
>
>
>Tom Stein
>comfut@xxxxxxx
>
>
>
>
>
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