anyone know if index contracts are moving the market? For example if i buy 1 million of futures contracts on the Dax will it goes up? And if yes how many contracts are necessary to make it goes from for example 14 000 to 14 001?
Seems like a loaded question. First, can you even enter a 1 million contract order on Eurex? The CME has aggregate limits on how many contracts you can trade in a month in any given instrument ticker. Second, what do you mean by "move"? Do you mean move the last traded price? You can do that with one contract if you simply buy the ask or sell the bid at market if there is just one contract sitting there.
That's what set off the Flash Crash in 2010, or so they say. Anyway, this is a complicated stuff. For instance, the index should technically only be moved by its underlying component stocks. For instance, Dow 30 is made up of 30 stocks. Only those stocks should have the power to move the index. But does it? Likely not. Also does the futures market follow the cash index or the other way around? Theoretically, the futures should follow the index, but that's not true. As stated above, Flash Crash is one good example. What about futures premium? Futures maintain a premium over the cash index. As it approaches the expiration date, that premium is supposed to converge. This means the two markets should ideally move in tandem to one another. This can also mean that if you have the power to manipulate one market, you can control the other as well. Depends on the number of sellers or supply. If there's no selling pressure, it wouldn't take much to move the futures market. The cash market "should" then follow as well. But I've also encountered some weird things where the futures goes up but quickly comes back down on hardly no volume while the cash index stays the same. So, all in all, I don't think anyone clearly knows how the two moves in connection to one another.
good Q. The best person to answer this question is Nick Leeson. He worked for Barings Bank. Nick was a very powerful and big trader. He was trying to move Nikkei futures but was unable to move them. But he managed to move a very powerful and big bank like Barings Bank. He managed to bankrupt it.
From 14 000 to 14 001 ? Watch the depth, buy all the offers @ 14000 +1 contract to make it prints 14001. Here you see the spread (Best Bid / Offer) 50,700 contracts @ 176.50 261,900 contracts @ 177.00 If you want the price to the next level, Consume all the contracts at one price, Then grab at least one from the next level. There is a difference between the DAX ETF and future. The future market should be tracking the ETF even if there is some positive feedbacks going on. The ETF is a basket of stocks.
OP meant buying futures to move index.Not buying futures to move futures prices. So this is a question if futures follows index, or index follows futures.
Flash crash does not prove index follows futures. Because it happened when market was already in a panic. AAPL has no power to move entire market. But if market is in a panic, a sudden big down move in AAPL could drag market into a crash.