Market Partecipants

Discussion in 'Index Futures' started by Big_M_Surfer, May 30, 2005.

  1. This is an important aspect of trading that I think the most experienced and skilled traders here in ET could help many other like me who are trying to get more knowledge on the subject.

    The mkt I'm interested is the MiniDow Future 5$

    -who are the partecipants beside the public and the little traders?
    -wich kind of trading and operativity do the big players make?
    -how often are them in the mkt?

    We can start from here and if the thread goes on we can get more in details.

    As I said I'm interested in the minidow 5$ but we could talk about the E-Mini S&P and the E-Mini NQ.

    Good trading

  2. Seems not so much people interested....
    let's start with something more specific; some standard definitions:

    Following are the definitions for the four different CTI categories. These are industry wide standard classifications.

    CTI 1 -Transactions initiated and executed by an individual member for his own account, for an account he controls, or for an account in which he has ownership or financial interest.

    CTI 2 -Transactions executed for the proprietary account of a clearing member or non-clearing member firm.

    CTI 3 -Transactions where an individual member or authorized trader executes for the personal account of another individual member, for an account the other individual member controls or for an account in which the other individual member has ownership or financial interest.

    CTI 4 - Any transaction not meeting the definition of CTI 1, 2 or 3. (These should be non-member customer transactions).

    Market profile definition seems to be more synthetic and may be more clearly defined:

    CTI1 designates local floor traders, day-time-frame traders
    CTI2 designates commercial clearing members, other-time-frame traders
    CTI3 designates clearing members filling orders for other members or for non-clearing commercial traders, and
    CTI4 designates clearing members filling orders for the public, or for any other type of customer.

    Market profile considers CTI1 participants to be day-time-frame traders, and CTI2 participants to be other-time-frame traders. It is recognized, however, that day-time-frame traders sometime conduct CTI2 business, and that other-time-frame traders sometime conduct CTI1 business.

    These definitions seems to be not so coincident.

    Any insight?

    Good trading

  3. I'd say 20 % "paper" (long term investors/hedgers) and 80% arbs, scalpers, swingtraders..
  4. Ok these are classifications that actually are of little use IMHO, let's try to give a more useful classification; I used in part what is the CFTC subdivision of holdings in 3 categories 1) Commercial 2) Non commercial 3) Non reportable positions. So this is a possible classification of future mkt participants:

    1) HEDGERS
    Commercials: A true commercial trader in the futures market will utilize futures contracts to hedge against volatility. In the commodity markets these traders actually plan to deliver or take delivery of the underlying commodity or have business directly related to the futures in which they hold. Commodities do not actually change hands via the futures market; this still occurs in the cash markets. Instead businesses will lock in their purchase or selling price in an actual commodity by buying or selling an offsetting position in a futures contract. In the index futures market, traders use futures to offset risk in their equity portfolios.

    Non Commercial: These large traders generally hold positions opposite the Commercial traders and have no business related to the futures. They are simply speculators attempting to make money by placing bets as to the markets direction. This is a lucrative attempt as the futures market is highly leveraged. Unfortunately for them, they are wrong more often than not.

    Arbitragerus: Arbitrageurs take advantage of price discrepancies between the underlying market and the derivatives market with the intention of making a profit, by buying in the cheaper market and selling in the more expensive market. Over time the actions of the arbitrageur usually force the markets back into equilibrium.
    Arbitrageurs make risk-free profits, although arbitrage opportunities are very short lived.

    Inside – floor members:
    Independent floor traders (locals)
    Market Makers

    Non reportable positions: These positions are the remaining open contracts that are not required to be reported. They are the individual small time traders that are not required to report their positions in the futures markets. This group tends to be VERY wrong most all the time.

    Outside non-members:
    Swing traders
    Long term traders

    I would start from COMMERCIALS:
    1) First of all we are talking about the EQUITY INDEX FUTURE MARKET so commercials are hedging their equity portfolios, and here start the problems.... How do they make it? it's surely more difficult to understand that hedging a comodity....

    2) Are they really only hedging or also speculating?

    3) How do they manage their large position during the day?

    Every hint and deeper contribute is wellcome.

    good trading to everyone

  5. :(
  6. I have heard that they is almost no paper in the dow pit, so the traders basically stand around and exchange each others money. I would think that it is even worse in the minidow. No hedgers or other big players, you are basically going againist scalpers and swing traders, not a lot of easy money there.


    There aren't many professional managers that use the dow to hedge their positions.

  7. Tks 5yrtrader for your reply, yes I agree with you, but as I wrote in my 1st post I'm interested in "every mkt" participants, for example the eminiS&P and the eminiNQ are big volume mkts where all the big players are.

    Because all the mkts are "connected" so what big players do at certain mkt levels in the biggest dow or in the other mkts influences also the eminidow.

    The eminidow is still a little mkt 70.000 to 100.000 daily ctrs, but the cash mkt (the 30 dow stocks) is quite impotant so that the big players are involved in.

    good trading

  8. yenzen


    Is this yet another one of Surfer's handles or what?

    I bet the guy has a stash of aliases as they toss his ass out of this place every week.

    Senor Zen
  9. tomcole


    Unless you're doing an academic study, what difference does it make? If you're right on price, you make money. If wrong, well....

    Not like you can go to the exchange and say,"I'ma hedger, please give me back my losses, as I have a legitimate need to hedge."

    Or, specs are EVIL, they took my money.
  10. I think that the more important distinction is between limit and market order participants.
    #10     Jun 9, 2005