by the way, pro rata fills are a bit of a tricky thing with Eurodollar...the way it works is that if you improve the price (IE if it is 53 bid and 54 and you go 53.5 bid or offered) then regardless of your size you will be filled first...however, outside of this little wrinkle, it is based on size alone...so the more you bid or offer, the more likely you are to get filled...it makes for some interesting fills...especially when someone decides to lift 4000 lots at once and go bid for 2000 you were offering way to many!
not sure I understand the question? what is there to 'buy into'? I see the volumes increasing almost daily on my screen and I get updates directly from the CME stating the %volumes...unless the CME is lying to me, or the volumes on my trading screens are somehow calculated incorrectly, it is a fact.
Thanks 4 the reply. So you seem to be mostly scalping for a few ticks (full ticks or half ticks?) at key levels. Does this mean you are patiently waiting for your levels and maybe taking your position a few times a day - or are you much more active than this? Ive heard some guys looking at the yield curve for the front 4-6 months and taking a position on the transition of bid to ask for a half tick. The are doing this all day. Seems pretty tough though as the bid ask size (which they take their que from) seems to alternate with the months - probably due to 3 month spread orders? this makes it hard (for me) to figure out the transition period/window. very interested on your views in this as most of the big money traders I know arent trading mini spoos or euro fx!!
% shifting to the screens is fact, but where did the CME find all these New Eurodollar traders hiding that were only interested in the product when it went electronic? I speak to large MM's and large institutions and they are not trading more, they are trading less. Overall volume has increased to levels that seem a little suspicious to me.
Scalping yes...yield curve considerations, well not so much...obviously keeping the larger picture of the curve in mind is important, but in my intraday trading my biggest indicator is the treasury market...ED tends to follow the 10yr quite well...anyway, size in that market is relatively meaningless as a increasing number of spoofers seem to have entered the market...if it's going down, even 10000 on the bid won't be around for long...my timeframe is very short...some trades are entered with an eye for just a quick half tick, others for several ticks depending on where in the market profile we are and what the 10yr is doing...I use ED as my main source of income, but you're right all the big money guys trade the short end because of the leverage...500 lots half a tick at $US12.50 a lot is more than most people are going to make all week trading 10 lots in the SPs or fx...however I do trade both these products aswell, usually when ED grinds to an almighty halt some days...
I think that when the index futures dried up before the summer, many saw the EuroFX futures and liked the bigger moves there. After all -- the potential for profit is what attracts the futures traders, no ?
ahhh...so that's what you mean by, "buying into the increased volumes"... well, you bring up an interesting point, but what might explain some of this is the fact that locals in the ED pit, since the beginning of the year I believe, have been allowed to use handhelds to trade on screen as well...now, stories I have heard about the ED pit are that unless you know someone, your fills are going to be arbitrary...ie: if you aren't close ( and I don't mean proximity) to the guy selling in the pit, then your upturned hand will be ignored...so, my hunch is that these guys are using the screen on an increasing basis to get more, shall we say, preferential fills for either themselves or their clients...this is all speculation on my part based on some anecdotal evidence mind you...as for finding new traders, well I'm a perfect example...used to trade Euribor onscreen but as the volatility and momentum days left due to ECB intractability, I moved to the Eurodollar as an alternative...again I have some evidence of others like me doing the exact same thing...and with the ED risk in usdollars rather than euros for euribor, I can naturally do more size...
interesting topic to pursue...in the ED pit (which I am from, originally) you are correct in saying that your hand may be ignored if you were not part of the club. That's part of the reason that I left the pit, but using a well known open outcry broker would fix the problem. My point is this. 1 million contracts per day used to be an event. It would happen maybe 3-4 times per month. On a day like today, 5 tick range in EDM volume would struggle to reach 500k. Now 1 mil is common place. An increase in volume was expected, but to this degree? It seems odd to me, especially when all the large market makers are learning a new environment. When you start trading a new product or system, do you trade larger or smaller? Thoughts?
I'll send you a PM about the size issue...but for your other question... Usually I trade smaller size until I get more familiar with how the product trades and reacts to signals and other markets...but as I said with ED, instead of having my PL in euros while paying commissions in pounds sterling, I am now risking USdollars...so, yes I cut my size down at first, but after that it went up dramatically...oh and by the way, I'm not quite sure what you mean by trading a new system?