Anyone got any thoughts on what the hell is going on in the Short Sterling future at the moment.The volume has totally dried up,bid/offer is 1-40 up most of the time,spreads are so wide it's a joke. It looks like all the vol is done in Z and H when you get to M it's laughable. Is this contract over?
Yes. It is now a disorderly and (imo) untradeable market.LIFFE have seemed determined to put as many obstacles in the way as possible for small/midsize day-traders for too long now.And you are quite right,the volumes reflect this.I wouldn't be surprised if they go even lower too.
This trade surely isn't over! I know a guy who's pulling in 20k a day on sterling (he's pretty much a market maker though).
I actually think that if the volumes/interest don't pick up soon then that contract is on a very slippery slope.The exchange have made some odd decisions over last year or so,the 1/2 tick being the main one and they are now paying the price. I'm sure your mate is doing well in there the same way there must be traders in the T-Bonds doing well also even though that has had some serious changes but by and large I hear the people are getting put off by lack of liquidity/tick size etc.It then becomes a self feeding issue where more people leave creating even less liquidity etc etc etc. Personally it doesn't affect me,been trading Euribor for years but just wanted to see if anyone else had any input/ideas. Today was a busy day everywhere,Dow off 600 at one point,Bunds up 150,Z Euribor 275k lots but M Sterling only 25k lots by 5.00pm,that is worrying.
Ok, but you can't market making the ZB now..you could be trashed 4-8 ticks in a a few seconds..so if there is someone (surely not large players) willing to trade that contract, it's for larger moves. my 2 cents.
I never said that traders doing well in the Bonds were market makers,It was a comparison that both markets had been through significant changes recently and both had seen declining volumes/liquidity.
The best way to trade sterling in these ridiculous conditions is to put stupid bids and offers in and hope a stop or market order goes off, happens a few times a day, even hour, now. Subject to major event risk of course! And yes I blame LIFFE - if they really wanted to do half ticks they should have doubled contract size to £1m.
From an office of 15 short sterling traders we are now down to 4, since the introduction of half ticks. Most have been wiped out or moved to eurostoxx. LIFFE have set it on a path to doom through their greed/ ignorance. Im yet to find 1 bank / local who prefers it. Even if they bring it back to full ticks now i think the damage is done. WELLDONE LIFFE.