e-mini hedging and blackouts

Discussion in 'Order Execution' started by brosnahan, Feb 20, 2007.

  1. I read a recent thread about a trader long on the YM when the ECBOT went down and he needed to hedge using an ES position.

    I thought that in the event an exchange went down, that your stop order would protect you. I'm assuming this guy was using mental stops. Do stop orders entered prior to the blackout protect you, or is a hedge position always necessary when this happens?
  2. It depends if the stop resides on your PC or the exchange. For example with on ECBOT stops are native -- they reside at the exchange. So if IB loses connectivity to ECBOT your stops are still there. But GLOBEX stops are simulated, meaning they sit on IB servers until they are triggered then they are sent to GLOBEX. So those would not protect you.

  3. virgin


    Doesn't Globex offers native stop orders ?!
  4. If Globex doesn't offer native stops, that's completely insane. I'll have to ask my broker or heaven forbid, call CME and fall asleep on hold. Thanks for your input SideShow.
  5. GLOBEX offers native stop limit orders, but not native stop orders. As SSB pointed out, the latter can only be simulated -- either by your broker or by your front end.
  6. Back in 2004 when new eCBOT went live, that exchange didn't accept native stops of any kind. I got my head handed to me in an open ZB trade that failed to trigger non-native stops into econ report, and have never traded the CBOT since.

    Perhaps that has changed, and YM has stop orders possible inside the exchange. Regardless, the YM - ES can always be used to offset partially or otherwise. If the Globex goes down, pit traded SP00S can offset eminis if you trade 4-5 emini contract multiples.
  7. anyway if the exchange goes down and you don't have any trade for one hour on the exchange, meanwhile the ES lost or gain, let's say 8 points (80 YM points) you'll be stopped out when the exchange went back, so, the best thing is to hedge anyway.
  8. Ezekiel


    Good read ... I've always known about YM/ES hedging

    I also actively trade these contracts
    ER2 (CME) / QM (NYMEX) / ZG (ECBOT)

    How would one hedge these?
    It seems to be a matter of finding the market that has the highest correlations to the ones in question.

    Any thoughts?
  9. Steveyd


  10. Ezekiel


    Thanks for the info...

    I'm assuming you can hedge ZG on ECBOT buy taking an opposite position with
    GC on NYMEX
    #10     Feb 23, 2007