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I'm no pro, but here's my take on
this.
Watch those ES bids carefully. When the
best bid gets to around 2500 or 3000+ it's more often than not someone spoofing.
It seems that they're trying to lull people into joining the bid and a few
seconds later they pull the rug out, cancel the bids and sell into whatever
suckers remain. And, yes, they probably are only looking for a few ticks profit.
If you watch the T&S, including the B/A on something like eSignal, you'll
see a flurry of activity all within a millisecond as the large bids vanish and
the sell orders come in. It's way too fast for anyone with an Internet
connection, so I'm assuming it's the commercials and upstairs traders with a
direct connection to Globex and huge computers with nanosecond reaction
times
I vaguely considered a system whereby
I sold at the bid whenever I saw this happening and for a while
earlier this year it looked promising, but I'm not into scalping a few ticks
here and there, so I let it pass. However, I'm acutely aware whenever my stop
rests at one of these overly large bids that I'm likely to incur slippage as the
bottom drops out of the bids.
Just my own experiences.
Andrew
----- Original Message -----
Sent: Wednesday, June 29, 2005 3:45
PM
Subject: [RT] Bid/Ask sizes
Maybe some of you pro's out there could help me with
this.
I'm watching the tape,(IB's booktrader)of the ES mini. I
notice how
common it is for the bid size to be 5x or more than the ask
size. I'm
able to see 5 or more levels up and down from the present
price.
My thought is who ever is entering bid sizes surely can't
be thinking
of making only 1 tick. The risk/reward ratio would be
terrible.
They must be thinking in points. If they believed the ES
would move
up enough for a decent profit and put their money on the line,
why
wouldn't they pay one tick more and be on
board?
TIA,
dom
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