I fail to see how doubling the size of the tick is going to affect commissions or the size of the positions. I guess that this measure is done to benefit institutions that trade for the spread via program trading.
Whoops, you're right - temporary brain glitch. I was confusing tick size with contract size for a second there. As for who benefits - well, that makes sense now. One of the reasons I will never trade the 30 year. Lots of better places to make money.
I know this is changing the subject slightly but I would appreciate it if someone would answer my questions. I have asked CME personnel but I can never get an answer. Is the 30 year bond, symbol US, the only pit traded U.S. bond contract? Is the volume of pit traded contracts recorded? If so, where is the volume reported? How does the volume of pit traded contracts compare to the electronic contract, symbol ZB? Is the pit traded contract identical to the electronic contract? Thank you.
The pit contract has very little to no volume. It is identical to electronic, we used it to get flat when the computers go down. The date it went to half ticks was 18 months ago, Mar 1st. I benifit tremendously from this move, being an intraday scalper. I like having first in line orders with more size/edge behind me. There is also far less noise in the market, an 100 lot no longer should clear two prices. I plan on sizing up real fast, With independent traders like me trading larger size it will increase our amount of contracts traded and cme's profit So the scalpers definatley benifit. The traders whoever they might be that trade large size also benifit with hopefully added liquidity. It should hurt small/medium algos who put market orders through. It slightly hurts postion traders who put market orders through, although there stops shouldlnt be as easy to hit with increased depth of book. I think it hurts anyone who does not use TT or a very similar front end product I met with the cme staff on numerous occasions and I think we all agree that there number one goal is volume with liquidity being slighlty less important. During our last meeting they were upset that volume in the 5 and 10Y contracts had recovered and the 30Y had not. They Interviewed most of there higher volume customers and it was about 75% pro full tick. (not postive about that last line)
A tick value of 31.25 would help in trading for my skill level and style because i and many other short time frame daytraders would trade the bonds different than we trade the ES. I used to trade the bonds (before the TY was top dog) and also traded the ES and found the ES to be the superior technical puppy to trade. In the ES you can anticipate the setups with far better odds of going to fruition than the bonds. WHY? Well, recognizing reasons are useless in daytrading and price action, naked and unclothed from frivolous babble is all that matters when the trader puts him/herself in the other traders shoes to get inside their heads. Thus if price itself is the only reason for the season (pun, ha), you need to decide what could force the other traders hands to stay with their trade or to bailout and hit the silk. In general bond traders are nervous nellies and afraid of their own shadows because they are always fearing inflation and are quick to dump a position, trade in a flash. I look at the intraday bonds in qtrs of a handle moves. Well more like this, but i usually grabbed profits in qtrs> 4 ticks is a level, 8 ticks is a level, 12 ticks is a level, 16 ticks is half a handle, etc, etc. Thats how i traded the bonds when i was in there. I was not an intraday swing trader in the bonds such as i am in the ES because the setups in the bonds compared to ES were like trying to find a gal from a trailer park to take home to impress your Mom and sisters. The quality was surely lacking. I assume bond traders have most of their "lunch points" (fear and greed, fight or flight) at the quarter levels mentioned. In the ES you might want to be thinking those same lunch points could be approx 5 handles. Get the picture? How many daytraders want to sit through a 8 tick loss in bonds and a 5 handle loser in ES? If you want to run with the big dogs as a piker, follow the habits of the big mutts in the pack. PS: So assume in bonds you are skilled enough to have solid discipline combined with a keen eye for the levels and a max loss of 4 ticks each and EVERY trade..............then you are good to go. I also like TT to trade intraday.
Consolidations and retraces of a trend can have generally fixed size relative to the previous leg size and or the days range. Think physics. But do not get a math book out. Just believe a retrace of a larger leg will have a bigger retrace than a small leg in a smaller trend day. In ES during the financials blowup last two years before we settled down retraces of 10 handles were rather common. I did not follow the bonds during last few years.
Ok now that it is switched back - looking at IB's quotes - whats up with the 3/16, 1/4 or 1/8 instead of 6/32, 4/32 or 2/32? Is this what the CME is doing and if so why? Don't get that at all, looks like grain trading!! Any ideas.
the 30 yr looks good after the full tick switch. Decent depth thus far (should get deeper as the weeks progress) seems to move well with the other contracts as opposed to being in a world of it's own.