Forgive me for being blunt (I can't help it once in a while), but do the people who are offering opinions and are asking questions about possible pro/con of 0.1 tick for ES, ACTUALLY DAYTRADE THE "ES" PROFITABLY ??? I really don't think so. I mean, posters like guy2 and Remiraz have gone through the trouble of explaining the issues, so that even a schoolkid can "get it". If they still don't get what an "edge" is and how tick increment affects it...
I have never been profitable over time trading ES and now I trade it very occasionally on after-hours. But if i saw a change in ticksize I'd probably start trading it more often and maybe then I'd have a chance of becoming profitable.
Since you seem to be so smart about everything... answer the 5 questions I asked above... and in detail... And base your answers on the difference between having ES at $100 a contract instead of $50 a contract. So far, no one wants to put out any answers to these questions. I guess they don't know?... I have my own anwsers to these questions but want to see if anyone else has any intellectual input (vs. making statements like "does this guy make $$$" or "does that guy make $$$" statements that don't really add anything at all to the thread... Not that it really matters. Because nothing is going to change. Some traders will still keep on griping and crying about the spread... Almost kind of like they are the ones who can't make a dime trading ES...
I've tried to give a worked theoritical example of the ES tick size at 0.25 and 0.1 points here: Bid/Ask Disadvantage Let me know if this clears it up for anybody. More importantly, let me know if I've got anything wrong in there!
Looks good to me. I would say we are getting totally ripped off by the spread being so wide. Can hardly believe it would make such a big difference to have the tick size down to .1, but it sure is obvious after looking at your article....
Let me try once more: The idea behind this thread is to have CME just use the SAME tick increment for ES, as with pit SP, i.e. trade in increments of 0.1 rather than 0.25. ES multiplier could stay the same, apparently ~$50-60k contract value seems to accomodate most traders In such scenario, IMO there need be no change in anything else, like margin, commissions or range (where did people think about this?!?) As long as contract's notional value stays the same, I wouldn't expect much change in ES volume (actually I'd expect ES volume to increase a bit, as more "micro-scalpers" will be able to get fills "in-between"). It's quite simple: In 1998-2002 SP500 daily range was about THREE (3) times bigger than nowadays. So tick increment was not a big issue. Now it is a big issue (imho).
I echo what mtzianos has just said. He is spot on 100% correct. That's the reason that I didn't join in the chat previously about what would happen to the ES if the tick size was changed from 0.25 to 0.1. The answer is that nothing would change except that the volume might pick up a bit. Remember that the ES is cash settled on the SP500 index which is based on the 500 largests stocks in the US. If nothing changes to them then nothing changes to the ES. It's like allowing the gas pumps to dispense gas in 1/4 gallon increments and then changing them to allow gas to be dispensed in 1/10 gallon increments. The car will behave in exactly the same manner and the way you buy gas will hardly change at all except you'll be able to put a couple more 1/10 gallons into your tank when you fill her up.
I'm bumping this poll because I've just received an email from someone at the CME which ended: ...and I wanted to see if there were any more votes out there...