hi. when there is a economc # like today how do bond traders in the pit react to the #? what i mean is,how do they decide where the next trade should be at? does someone just pick a # and yell buy/sell at that level and thats that? also with ecbot there is a bid/ask size,how doesthis compare to the pit size or is it even relevant. i used to trade stock options and bid/ask size had a bit of meaning but here i'm not sure. thanx
And then let us know if you learn anything interesting! What happens in the pit when we get one of those death spikes?
The death spikes are usually when someone comes in to move about a 1000 plus in extreme market conditions, like the first order to come in after a number. Essentially, if locals know the number is extremely bullish, but everyone wants to buy it, they will back off a little bit. Since they are the only ones willing to sell it, the market keeps getting bid until either it has reached a certain level (something they can lean on above) or locals feel they may be able to dump it off at a better price on the screen, usually the latter. Or, in the opposite case, about ten seconds before the number the market will be 18 bid at 18.5, and Goldman will come in and say at 20 (showing an offer outside of the best offer). This happens quite a bit and goes to show that paper sometimes decides where the move will be stopped dead in its tracks after a number rather than locals pushing through stops. Nine times out of 10 though the screen will have the more extreme death spikes on the numbers. It is pretty fun to watch how the locals trade the big numbers like Unemployment, FOMC, etc. There is definitely more paper during those volatile times, or like today, when the screen remained extremely thin and difficult to put in orders.