Prop firms' strategies

Discussion in 'Prop Firms' started by Done 777, Mar 7, 2009.

  1. Done 777

    Done 777


    I heard the most prop firms' workers are making 100% mechanical strategies - arbitrage between contract series. But when i see bids and asks (for example) s&p500 e-mini and full-sized contract, i dont see any arb opportunities.
    So could you tell me, which strategies are used?

    2. question, if prop firms make mechanical arb/spreading or simple momentum trading, so why prop firms need workers, cheaper way is automated trading using computer - not people.
  2. rosy2


    its not pure arbitrage. but many firms do spreads and are also market makers.

    you need people to come up and research strategies, to program strategies and infrastructure, monitor the running algos. you haven't eliminated people but rather reduced the number of people needed while increasing the caliber of those hired.
  3. As far as arb between the pit SP contract and the mini, yes it does happen, all day everyday, especially during slow times of the day. During big runs it can get a bit difficult to do unless you are on the right side of the direction, as the mini will often move further and "push" the pit contract. During slow times, however, you can easily arb by buying/selling the pit and offsetting on the mini for a a bit higher (say buy the pit at 700.10 and sell the mini at 700.25 or 700.50), do this on a 100 lots or so and you're talking real money : ).
  4. Done 777

    Done 777

    I am sure you know this old cbot's publication about arb

    look at figure 2 (intraday deviations)

    why when i watch quotes djia spot vs. futures on GFT i dont see any arb opportunities?
  5. They are arbed away before you can see them?

    La 25e image sera réelle