Although I am FOR a larger multiplier that is electronic (as the pit is going away). I don't believe that having a 0.01 spread will attract volume and liquidity. Big players want SIZE to do their business, and a having a 0.01 tick size will not bring that. The lowest I would go would be nickels, but dimes would still be my preference.
This is just silly. You seem to think they need to change the size because you think the ensuing market will better fit your strategy? The market is so deep because that is how the big guys get size done. If you reduced tick size you would reduce the size on the bid and offer. You talked about this making the market trend better. The market is going to trend as much as it is going to trend. I don't think you the change you are looking for would happen, and it would hurt the big guys. Volume would go up, which the exchange would love, so there must be a real reason that they haven't done this.
1) 20-12. Fibonacci Ratio! :eek: 2) A smaller tick size benefits outside customers and is "detrimental" to professional traders.
Yes I agree about the market will trend as much as it will trend, however look at the TF. You can see because of the smaller tick size, it DOES tend to over shoot sometimes, meaning the possibility of an extra tick here and there. It would bring more volume to the market, and it should bring more bids and offers. Personally, I still believe that the big boys would be able to work around the spread, and even potentially get another nickel instead of the previous tick size. They have algorithms to do this. Plus, the average size on the inside bid and offer in the mini is about 300-800. So if the tick size would be split, adding the extra liquidity it would create, you should see 200-500 at the inside bid and offer. If the big boys need to fill 1000 contracts, they should be able to work it around 2 ticks, giving them a potentially better fill. The only reason I would imagine that they haven't changed it is because of the pit. Many of the pit traders are in ties with the board of the CME and that is probably the reason why the emini hasn't switched. Once the pit is gone, we should see the tick size decrease to replace it. Just my 2 cents.
at .10 even a 30 contract piker would have trouble, unless they were the only one hitting the level. you'd have maybe 200 or 300 lots in the ES twitching on the inside 2 or 3 levels all day. Slippage would be the same .25 as it is now.