Hope you read the latest edit of my last message. I thought I would flesh it out a little bit. I finally got my mind into thinking about a lot of this stuff that I remember was confusing when I was just starting out. cT
Thanks, Charlie. I've read your newest-edit and it's very helpful. I'm just starting on the future-trading, and there is a lot of stuff confusing to me. Your post is very helpful. I'm trying to find some detailed info (maybe some books or articles) on how the broker, exchange, and clearing house work together to make the future-trading happen, as well as the relationship between them and between different exchanges. I've got to say it all looks very complicated to a newcomer.
Good luck. For whatever its worth, IMHO, unless you are planning on developing some type of software that is going to interface with any of these parts, having a detailed understanding is not necessary. If you want to understand it better because of fear of corruption, fraud or just plain getting ripped off, that is understandable. But again, just my opinion, the key components that I described above all have very high integrity - moral/legal integrity and technical integrity. The more shady areas are the next layer down, the folks selling systems, indicators, advice or anything that involves the question "What or when or how to trade." That, of course, is a whole different subject. I've been involved in the futures industry for may years. I am now starting to dabble in the stock market. Most folks probably start with stocks then dabble in futures. Just to expand on the integrity of the futures market a little bit further. I recently sold a big cap NYSE stock at a major stock broker. I had a limit order working to sell at a price that was above the market. I was watching that brokers real time data feed and saw two different quotes print above my limit order but my order did not fill. I looked at that brokers "time and sales" screen and the two trades were there. I picked up the telephone and called that brokers trading desk and spoke to the senior trader and asked him why my order did not fill. He said he would research it and call me back. A few minutes later he called back and said he contacted the nyse and they told him one of the trades was a "special" option spread trade (I assume someone bought the stock and sold some options) and it was actually an off the book trade. And the other trade that traded above my sell limit order was some other type of special trade. Well luckily the stock eventually traded cleanly above my limit price and I got filled. But I remember thinking to myself, "This would never happen at the CME or ICE". This is IMHO the beauty of the (electronic) futures market. For a give contract, there is one market, and one price quote. Everyone gets the same quote at roughly the same time. If you have a sell limit order working, and a trade quote arrives that is above your order, 100% of the time, 100% of your order will fill. And while I'm talking about integrity, my inderstanding of how the FOREX market works (I've never traded it) is just plain scary. My statement about how the basic pieces of the futures market all have high itegrity, I think, doesn't apply to FOREX. Unlike futures where there is one quote and everyone gets that same one quote, it is my understanding each forex broker provides there "own" quotes. And in the forex market, again just my understanding, when you as a retail trader make a trade, the party on the other side of the trade is YOUR BROKER!. To me this is fraught with potential fraud. I dont want to be trading againt the same entity that is feeding me there own quotes. So in my opinion, between stocks, forex and futures, futures have the highest integrity. Sorry, I seen to have started rambling. cT
Thanks for the "rambling", Charlie. It has many information and insights and is actually quite helpful. Appreciate it. Happy new year to all.