"big size" proprietary futures trading firms

Hi!

A friend told me that there are futurestraders working for chicago based futurestrading propfirms trading 300 Dax lots (!) or 1000 eminis per trade. Is that true? Which trading firms trade these big sizes?

If anyone is trading for such a prop futures firm, what is the beginning trading limit for Juniortraders or how many lots do you trade per halfturn?

The aspect of the risk trading x00 lots FDAX makes it difficult for me to believe that. Major banks or hedgefunds trade these sizes but never without a hedge.

Thanks.

 

Zerocool? you get that handle from the hackers movie? Man that movies old.. I love how in movies they make complicated computer applications seem so simple... Sorry off topic and on a tangent, but brought back memories.

"There is no right and wrong, only fun and boring!"

 

I know of at least several prop firms in Chicago that trade that sort of size on those contracts. One prop trader I know who does that sort of size on the Dax had also previously spent 10 years in the financial pits, so he had a pretty good feel for things going in. As to your question about junior traders, it depends entirely on your track record and experience. It's not uncommon to have someone train while trading one-lots and build from there.
Jessie

 

I know a lot of prop firms that trade some serious size. I would like to see some of these guys try to get out of a 1000 lot emini. That could be ugly.

 

Actually it is not as bad as you would think. I watched a guy flip several RT of S&P emini for 250 and 500 lots. Zero splippage from what I witnessed.

 

What are they trading off or are they trading spreads?

 

It's pretty easy to work your way out of a position that size (or even much larger), you don't have to do it all at once. You can lay off the risk in the big pit, or by using options, or even (now MUCH easier because of the CCL cross margining) in the Dow, until you can work your way out at decent prices.
Jessie

 

I seriously doubt that many ES spec players are laying off their risk in the ES or SPX options, unless they fancy an ass-reaming. If so, I'm going back to the SP options crowd to get a piece of that action. Man, talk about the -edge(+edge for the op locals)

arb.

 

CHICAGO, Dec. 19, 2003—Chicago Mercantile Exchange Inc. (CME) announced it will increase its order quantity limit on all electronically traded equity index futures contracts to 400 contracts from the current 250 contracts. The new order size cap will become effective Feb. 1, 2004 for trades dated Feb. 2, 2004.

The new order limit size will apply to all equity index products traded on CME’s GLOBEX® electronic trading platform, including all full-size equity index contracts and E-miniTM products. The order size increase does not apply to CME’s non-traditional TRAKRSSM futures products.

CME previously increased the size of its order limits in May 2001. Since then volume in CME’s equity index products has increased 138 percent, totaling over 19.2 million contracts in November.

While there are no limits on overall order size in equity index futures, orders greater than 400 contracts must be entered as multiple entries of 400 contracts or less. Order limits were established to help prevent erroneous orders from being entered into the GLOBEX system and to protect customers from keyboard errors. Since order limits were last increased, CME has made additional enhancements to its GLOBEX system to prevent or minimize the impact of erroneously entered orders, including new stop logic functionality implemented earlier this year.

 

There are definitely prop firm traders that trade this kind of size in the Eminis and don't have a problem. The Eminis have a pretty thick order book so you can trade 1000 lots (250 at a clip - CME rules) with little to no slippage. Even if you needed to dump the position in a hurry by going to market, you could do it with out pushing it too far against yourself.

The Dax, on the other hand, is a different matter entirely. I'm sure there are a handful of prop traders that have that kind of size to swing in the FDAX, but not many (and a lot of them are indeed hedged somehow). I know of only one big FDAX trader at a prop firm that takes unhedged positions. I don't think he takes any positions bigger than 200 contracts and I don't think he does that kind of size on a regular basis (he's usually in the 100+ range). Given both the liquidity and volatility of the Dax, putting on and getting off 300 FDAX contracts would be more difficult (and in some cases substantially more difficult) than trading 1000 lots in the Eminis.

Most (if not all) prop firms are going to start a beginning trader that has no experience with very small size (probably 1-5 lots per roundturn). Trading firms want to see your risk management and trading style before they crank up the size. All of the big traders that I know started with small size (1 lots, etc.), kept their downside tight and made consistent money with the size that they were given. They then "graduated" to bigger size. Believe me, even as a new trader, if you're doing well (with respect to your current trading size) then the firm will recognize that and your size will be increased.


-SG