|
PureBytes Links
Trading Reference Links
|
RT,
I mentioned before the ability to trade as low as one penny with some
British wagering sites. The post below from another list points out the new
possibilities much better than I said it.
Steve
----- Original Message -----
From: ric ingram <ringram@xxxxxxxxxxxxx>
To: <tradingandspirituality@xxxxxxxxxxxxxxx>
Sent: Tuesday, October 02, 2001 5:28 AM
Subject: [tradingandspirituality] Revolution for Traders
> Hi,
>
> The introduction of penny trading on the internet is perhaps the single
> most important change to the trading environment I have seen in my nearly
> 20 years of trading.
>
> I have delayed talking about this in detail on this forum to allow the
> technology to 'bed down' and for there to be several alternatives
available
> to traders.
>
> Now the time seems appropriate for this discussion. Your experience or
> opinions would be most interesting.
>
> Before discussing the opportunities as I see them, perhaps a little
history
> might be helpful.
>
> History
>
> In the UK, the FTSE100 futures contract was for 25 pounds a point.
This
> made it available mostly to institutional traders and very large private
> traders.
>
> Perhaps to meet a pent up demand, FTSE100 options were introduced at 10
> pounds a point.
>
> Then the FTSE100 futures were re-introduced at 10 pounds a point.
>
> Well before these moves the Mid-Am market in the US pioneered smaller than
> standard contract sizes.
>
> Often in the lead, and sometimes behind, mini contracts appeared in the
> S&P500 and other US based contracts.
>
> 2 pounds a point FTSE100 futures contracts is being introduced.
>
> These moves have widened the number of players with account sizes suitable
> for trading index and other futures.
>
> Implications of Large Contract Sizes
>
> Even at these smaller contract sizes, it is relatively easy for smaller
> traders to overtrade.
>
> The large contract sizes also have implications, for smaller accounts, in
> the selection of the full range of trading approaches and for to employing
> some position sizing techniques.
>
> Limitation of Trading Approaches
>
> Many successful trading styles which require two or more positions such as
> arbitrage or market making are difficult to execute on a small account
> based on standard contract sizes without overtrading looming its ugly
head.
>
> Other trading methods with high success rates - such as volatility
breakout
> - which involve relatively high percentage of losing trades with
> significant point losses, become difficult on a large contract size for
> smaller accounts to sustain without overtrading.
>
> Position Sizing
>
> Position sizing techniques, using multiple markets to reduce draw-downs
and
> even out profitability become difficult when using contract sizes which
are
> large relative to account size.
>
> Freedom at Your Fingertips
>
> Now with an effective penny a point contract size available via internet
> trading, all position sizing and trading approaches become available to
> almost all traders without needing to overtrade.
>
> Of course, overtrading is still possible, but is no longer a function of
> minimum contract size.
>
> Also internet trading eliminates the need for a broker as the internet
> trading companies tend to be principals - trading on the basis of
contracts
> for differences with a slightly wider bid-offer spread than in the 'real'
> market and which includes equivalent of brokerage fees. This means that
> there is no waiting for execution - the bid-offer prices you are quoted
are
> guaranteed when you 'hit' the bid or 'hit' the offer. A whole category
> of slippage, mistakes, delays, overlooked trades and out-trades disappear.
>
> The contract for differences approach allows the internet trading
companies
> to each trade hundreds or in one case thousands of instruments - if it
> moves you can trade it on-line!
>
> The same companies also supply free real-time data - a reduction of costs
> for the bigger trader and a barrier to entry removed for the smaller
trader.
>
> Whichever way you look at it, the passing on of lower transaction costs on
> the internet to traders is just one further benefit of the trading
revolution.
>
> Trading in small units, Ric.
>
> P.S.
>
> It is surprising how many people who are in denial of the existence or
> validity of this opportunity - but then denial is such a common human
trait.
>
> Contact me privately if you need any web-site references.
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxxxxxx
Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
|