Do anyone knows why do we have one more decimal on the 6E? I have read it begun today but what is the reason?
The reason is to make me trade sim for the next few days. It feels a lot different than Friday. I just put a sim trade on and while it was a 15 tick winner it only gave me 93.75 as opposed to 187.50 I used to get. One thing I have noticed is the algo's seem to be just as confused as everyone else. They aren't filling in the spread as quickly as they used to. Of course there are half the limit orders on the book at each level as there used to be. It "seems" as if it is moving a LOT faster than it used to however it is not. I am just seeing more price movement due to the half ticks. I am thinking it will take me a week of sim trading to get comfortable with it. To answer your question; I don't know why they did it. I have a feeling it was an effort to get more people (forex traders) involved. It is also probably going to improve liquidity a bit. Of course it will also increase revenue. Most traders eventually will put on more contracts to compensate for the tick reduction. (I will be)
All explained here: http://www.cmegroup.com/tools-information/lookups/advisories/ser/files/SER-7425.pdf They've just increased the "resolution" from 1 tick to half a tick. The value-per-tick is unchanged. (A smaller tick size makes it more attractive to HFT's, as it increases arbitrage opportunities, so in the long run it should gradually increase liquidity, too, which is doubtless the intention.)
I trade spot with ib, the min screen price is 1/2 pip, but that actual fill will never be worse and may be something even tighter. So for instance, the min limit you can enter is 1/2 pip, but if there is price improvement you will be filled at a better price. Trading 6e at a full pip is just no longer in keeping with how the underlying (which is eur.usd) is traded. Price improvement occurs when I am willing to sell the bid and you are willing to buy the ask. Both of our orders may get matched up at price improvement. And that is the beauty of a really tight spread.
> A smaller tick size makes it more attractive to HFT's This is unclear. Some HFTs benefit, some don't. The clear beneficiary is small retail.
Well my question was due to I was receiving a data much different, but after a while, the data appeared as always. More little work.
So far I'm liking it. I think this might be a good thing for retail traders. Many people stayed away today just by looking at the orderbook. The volume today was 163,551 and last week it didn't go below 188,488 so it was about 13% less volume than normal.