Gold and slippage

Discussion in 'Metal Futures' started by AK100, Nov 17, 2011.

  1. AK100


    Is it me, or has anyone else noticed that there's probably no big market on the planet that gives slippage like Gold.

    Big volume, well traded around the world but put your stop just above/below those highs and lows and 10-50 ticks worth of slippage is not uncommon.

    It almost seems as if above/below those highs and lows nobody has any resting orders of any size to help consume the mass avalanche of stops hence the 10-50 ticks worth of potential slippage.
  2. plyka


    Is it me or has anyone else noticed that trading forums are getting less and less active over the years. It's weird, i would think that the progression would go the other way.

    Anyway, regarding your question, definitely, gold is the worst! I mean, you can't even trade the ZG anymore due to the insane spreads. I remember when the ZG was much more active, and you'd get a bit less slippage on it simply due to the size difference. Everyone has moved to the YG, and the spreads are tight, but the number of contracts needed to hold for the same amount of gold causes some slippage in my opinion. I remember i once had 8 ZG contracts that i sold very quick a few years ago, and it caused some major slippage, but if i had to do the same today with its equivalent, ie 8x3=24 YG contracts, it would be much worse.

    Gold is a very active market, I have ZERO idea what has happened to the ZG with the spreads/inactivity. Oil is my best friend just due to this reason. The spreads are usually 1-3 pennies and you can move as much as you want with little slippage. Obviously the oil market is far bigger, but the difference is truly huge between the two markets.
  3. You're asking for it. When trading in or out of longer term positions in GC this can be used to advantage - I am happy to bid $3/4 below an obvious "support" level and usually get them.

    plyka, try the COMEX gold contract (GC) not the less liquid CBOT offerings.
  4. bone

    bone ET Sponsor

    Oh, jeez. Gold is nothing compared to Silver or Copper in terms of slippage. Try ICE-NY Cotton ...

    Boo Hoo Hoo.
  5. I doubt those other markets you mention have the volume that gold futures have.

    Based on volume Gold futures probably give the most slippage of any contract out there.

    I tried trading gold futures in 2007, it looked good 100K+ contracts traded per day with a tight spread, but i stopped after a few weeks because of the horrendous slippage.

    Gold is probably ok if you are doing at most 1 or 2 trades a week with a wide stop. The wider the stop the less is any slippage as a percentage of the stop distance.
    And if you a long term trend follower with a 10 ATR stop, i doubt if you care a huge amount about 10 to 50ticks of slippage.

    But Gold is not a suitable instrument for day trading, even though the volume and tight spread give the illusion it should be.
  6. bone

    bone ET Sponsor

    I have clients who spread trade Gold vs. Silver on a shorter duration timeframe ( intraday ) to very good effect. A couple guys make their livings at it. I have several clients who literally print money in the LME spread trading the 3 month forwards - but of course, you will have to clear an FCM with an LME seat.