Is the ES traded solely electronically so that in the event of a CME failure, there is no way for any orders to be entered.
That is correct. Trades on Globex only. But they are fungible with the S&P big contract which you could trade open out cry. 5 ES are worth 1 SP. Likely though, if Globex went down in a catastrophic manner, they would suspend open out cry also. Globex rarely goes down for technical issues and when it does it's not for long. And if you're thinking 9/11, exchanges don't close without warning. And on that day, they closes the exchanges right at the open give or take 2 minutes.
Thanks DmanX. So if the CME closes for any reason, is it fair to assume it will re-open at more or less the same price.
I don't recall the exact time but it first started with news that its close is being considered. Then news that it would not be open for trading. The first plane had hit about 45 minutes or so before the open of regular trading. I recall Globex pre-open session was active at the time and remained so up until about exchange close around 9:30. Bush spoke at 9:30 informing the nation. Exchanges don't close instantly because news doesn't disseminate instantly to everyone. Here is what would happen in a midday attack: Some would know and react before everyone else. Prices will start to decline and turn precipitously as others get the news and stops get hit on the way down. Especially at support levels. If you always use stops, you'll just get stopped out. If you manually trade, you might find yourself chasing the market down. About 15 to 30 mins after the event occurred, exchanges will likely close or put curbs into effect depending on the nature of the attack and the strain on telecommunication infrastructure. But if you watch the news or have a live news feed, the news of curb or closure will come across.
Depends on length and reason of closure or fault. Normally it will first pre-open with order matching. The fact that it went down would have spooked folks and therefore set up an imbalance. The longer it stays closed, the greater the imbalance. Very rarely Globex might have a stale quote problem which causes a temporary system fault. I forget the exact procedure in this case but it amounts to order matching at the stale prices then resuming order matching at current live prices. I might have that a bit off but again, if you trade with stops, you can define your risk. One other important thing is to always use the stop type that is native to the exchange and make sure you use a feed/platform that sends orders like stops either directly to the exchange or on an order server. Preferrably to the exchange as "accepted" or "working". If you use OCO, only IB and TD ameri AFAIK, holds the OCO on their server. Every other platform like TT and Ninja/Zenfire, simulates it on your computer until price trigger it, then they send the order to the exchange. In that situation, do not use stop limit orders since the delay from trigger to submit to acknowledged to working may lead to a blow through of the trigger price. An ordinary stop, which is a valid order type for ES, will execute at prevailing market prices as soon as TT or Zen detect the trigger price and send it in.