how do we know that FCMs or the CME itself doesn't give preferential access to the market to big players? i mean, sure, compared to forex, futures is definitely a lot more transparent. but we retail futures folks are merely told that there are no shenanigans going on behind the scenes. where is the evidence? why should i believe that the big players in the market are trading on a level playing field? it should be very easy for FCM/CME to give out information on where stops are located or where a certain buy/sell position is located and its size to those willing to pay for a handsome amount. sure, it may be illegal, but when has that ever stopped the rich from trying to gain an advantage? also when some retail trader from Asia places a big buy order of, say, 1200 contracts of the ES, given the latency it is so easy for the FCM to direct that information to a customer's algobot located in a server near the exchange after which case it could frontrun that order. futures being on an single, central exchange is often proclaimed as a reason why futures is more 'fair' than forex which is a blackbox. but imo, it's not so much 'fair' as it is 'transparent.' maybe i'm just being conspiratorial but the burden of proof should be placed on those claiming certain types of manipulation don't occur on futures exchanges. you can't just claim that without giving any evidence.
There should not be a monopoly on the equity futures because compettiton would help level the playing field. Call the cme and start poking aroudn for answers.. it will be a RABBIT hole that you will wish you never entered! it is the big boys club still and legally they ahve to let us play so they do their best to kill us and that is truth. deck is much evenly stacked in stocks. FCM wise.. there is 167 billion in funds. that is 1/5th the market cap of amazon!! the futures mkts are actually small and it is crazy that they actually move first before stocks and control everyone's fate and yet... they blame the nearly 100 point emini flash crash on news and peopel selling? the volume wasn't even big on teh fall for the emini which proves.. an hft Cancelled their liquidity instantly and the market fell huge. so the news doesn't want to scare people but you gotta be nuts to keep your entire retirement in teh us stock market right now!! they do not care.. i am surprised silicon valley hasn't had mroe of an uproar about the ridiculous volatility. volatility is a traders friend to a certain point bu tbeyond that.. it is like a truck with a couple wobbly wheels that keep speeding up and ..kaboom a crash.. we haven't seen anything yet. today shows you.. the market is VERY WEAK and trumps tariffs are LOSING
There’s a very good reason for that. Introducing Brokers overwhelming have pretty much one strategy of customer: flat price directional bets from an independent trader with more times than not nominal capitalization. That’s easy - the only sticky element to that is risk controls on a guy with $20K who’s scalping intraday. A big Chicago direct clearing member FCM has a MUCH broader strategy much more sophisticated clientelewith wildly different IT and Risk support need. There’s no possible way they could publish common pricing or even tiered pricing. Here’s some examples why: 1. You’ve got a MidWest Banking group who might or might not want to hedge the mortgages they wrote this week and will sell on Monday. Maybe they place four trades in a years time. You’re going to quote them like $15 per R/T just because. 2. You’ve got an options market making group of 50 traders running the ORC platform. You want to quote them your very best rate schedule, but you are also going to have to account for some of the time of those $175K per year IT super specialists you have on staff. Your IT staff is going to have to be on hand to address ORC issues from Sunday evening to Friday afternoon. And ORC issues are a whole ‘nother ballgame compared to TT or CTS4 or CQG IC. That’s an adult swim. 3. You’ve got a major Chicago or NYC proprietary trading group with a $200M account and another $200M line of credit from Chase bank on file. You want to quote them your very best rate possible - but they are very sophisticated Spread traders and arbitrageurs. They’re doing inter market crosses between futures, options, options on futures, cash, swaps - and a couple of the really big groups have ISDA agreements for swaps and a few of them are doing cryptocurrencies. It’s a pseudo-omnibus account because really only an Investment Bank will handle a true omnibus account and they take $B’s not $M’s. You are going to have to account for very specialized risk software ($$$$) and an inordinate load on your Risk Department. Most of these firms have several (or more) HF Algo Strategy teams - more IT Dept time. 4. You’ve got probably a hundred (likely more) small to medium sized hedge funds. They want good rates and bespoke service. Most of them are doing some sort of relative value strategy. Some are doing almost daily funds transfers between a Knight equity account and their futures account. They’re all transferring funds in and out like a mechanic. Fixed income funds are doing cash Treasuries and future. A fair number of those funds are running HF Algo strategies - more IT Dept time. 5. Commercials. Producers and users. Passive hedgers and very dynamic hedgers. Monster spread traders. Like, call the FCM execution desk and tell them they need to buy 5,000 May-Aug-Nov ‘19 Bean Butterfies between $xx and $xy. 6. Independent traders. More difficult than you’d might think. Half the ones I take on are missionary style flat price directional. The other half (usually the rich ones) are doing something more esoteric and multidimensional than the other half. These guys might be the easiest to quote - but their trading volumes vary widely and so do their IT and Risk requirements. And the MidWest Banking Group I mentioned in example 1. above is going to be pissed that he’s getting charged $15 per R/T (he trades four times per year) but an independent trader is paying $1.05 per R/T (or much less) and he knows it because you published it on your website. And that’s why the big direct clearing member FCM’s don’t (and shouldn’t) publish rate schedules.
Are you aware of any specific examples of a regulated US futures exchange selling order flow, or selling order queue priority like the equity markets and cash forex markets? Enlighten me.
my point was that just because we have no information on whether they sell order flow doesn't mean that they don't. and that if they wanted to, it is technically very easy to do so without getting caught. if someone wants to claim that futures exchanges are clean, then the burden of proof is on them to prove that that is the case. why? b/c in this industry, claiming that there are no shenanigans behind exchanges is the much bigger claim given the amount of manipulation and thievery in this industry.
But, but it's possible! Now let's talk about a time a bucket shops in Cyprus sold order flow and someone caught it on YouTube and made a meme out of it.
yes exactly. if it's possible, always assume the other side is going to take advantage of it as much as possible and adjust your trading accordingly. you can never be too safe in this industry. too many fuckers with deep pockets/connections trying to fuck retail over. i mean i'm not complaining. no value whatsoever is created in the futures markets. it's all just money games where people try to take others' money. manipulation and trickery is the name of the game here. i'm just trying to prevent any noobs reading this thinking they'll have a better chance making money in futures b/c there's no manipulation by FCMs or the exchanges. there's literally no evidence to prove that claim.
Fuutres exchanges are really self regulated entities first and then you have teh cftc. the cftc is in the stone ages. they ahve a budget of 212 million..that is it.. hft spends more than that on technology just one company. I find it to be very short minded to look at the technology arms race and nto realize that the regulators are outgunned and outfunded.. it really is regulation arbitrage..
Let’s just cut to the chase here. We are thirty years into electronic trading exchanges - they’re not going away and Algos and automation aren’t going away. It is a waste of emotional energy to piss and moan about it. There are some hard truths that need to be taken to heart: 1. Trading OTC forex with $5K might might not be a particularly wise choice. 2. Sitting in front of a monitor, mouse in hand, and trying to scalp fast moving markets like forex, gold, crude oil - where you know for a fact Algos and automation are participating might not be a wise choice. 3. My suggestion would be for the retail trader to only look for 1, 2, possibly 3 really high quality entry setups per day and to give it each a chance to develop. That way, you’re taking the bots and the spoofing and the games out of it. It’s also going to force you to have some self reflective accountability for your choices and trade management - which is a good thing. If you step away from the microstructure of the market order flows, good things are more likely to happen. I wish everyone good fortune.