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Regarding locals knowing where stops are....
I traded on four commodity exchanges and very rarely knew where stops
were...sometimes a broker would apear anxious as a certain level was being
reached and this might be a tip, but revealing orders is very serious and
there was always someone around would you rat (myself included--mainly
because I hated the little clicks which formed).....
When brokers could trade for themselves without restriction and had a few
"partner" brokers, they often would trade a great deal amongst themselves,
expecially on the Merc, and I always suspected things were not quite above
board. I found the CBOT to be a better environment for me....I beleive in a
level playing field and if some had knowledge that I didn't, it pissed me
off..I"m sure others too, and the rules and practices have been greatly
changed and tightened since the mid 1980's which is my experience timeframe.
A major benefit, by the way, of being a local was the opening range where
the customer almost always sold the low end and bought the high end of the
opening range from a local...often a local to whom the broker owed a
favor...Electronic trading splits the range of bids and offers and fills all
at the medium price...a loss to locals, but then there are many fewer
"errors" and outtrades which have to be "paid back" out of locals and
brokers pockets, and that is a huge benefit.
Bring on electronic trading!! BTW, CBOT membership (in a reversal of
earlier vote) voted last week to proceed full speed ahead with the EUREX
alliance and electronic trading should take a huge leap next year. Dow
futures to trade side by side pretty soon and Merc expanding electronic
offereings..
The leverage and commission rates available should greatly interest today's
SOES traders...if there are any surviving by then.
"Chow"
Michael
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