The firm I just joined has an S&P squawk box blasting all day long in our trading room. I was curious as to the question that does the big contract have a tendancy to lead the E-mini or not. I have found the squawk box a bit annoying and have been thinking about just putting on some head phones on and forgetting about it altogether. I mean the mini's do 4 times as much dollar volume, and why would Goldman or any other broker choose to execute in the pit when everyone in the world is hearing ," Goldman buys a 100." Yeah they are probablly selling 500 in the minis every time you hear this. Just curious if the big contract leads or not and how useful following it really is. I have not put the 2 contracts side by side yet and compared because I have enough on my screen already but I was thinking about it.
You need to watch the mini and listen to the squawk and you'll get an idea of how the two relate. The locals have an edge that can't be beat, IMO. The see big order flow, and they can step in front of that risking a tick to make a couple of ticks. They can easily exeute in both markets, and then they can clean literally clean up the seller when he/she is done. The reason why paper executes in the pit? Theoretically, they can get better fills. Would you rather sell .9 or .80, or would just hit the bid in the mini at .75. Over time and many contracts, it adds up to a lot of money. In the end, arbitrage keeps the prices in line, so they move together, sometimes the mini leads, sometimes it lags, but knowing what is going on in the pit can be very valuable, but like most things, you must observe, listen, and learn how to use the information.
You use the squawk as a confirming tool. Of course you are not going to buy because merrill is buying. The squawk is a energy indicator, if the market hit new highs and the caller is quiet, what do you think? You can never see the energies level and the emotion level on the screen.
I have the S&P squawk too, and the oil squawk. I use the oil squawk to determine how far to run winners. if I'm in a winner and the pit is going back and forth, I take my profit the pit ain't going nowhere so the screen won't either. if the pit is moving (ie not just bidding and offering back and forth), I take my hand off the mouse and let it run until I hear the pit stop moving and just go back and forth. it may not work as well for minis as so many people trading minis don't even have CQG let alone WAVE. it really depends on what other people have. I reckon most people with a good squawk setup are trading full contracts. but the minis follow the full contracts. it sounds to me like you may have an edge over your fellow mini players.
Perhaps it's my quote system, but I find the pit CL contract doesn't lead the emiNY crude at all and often lags it. I don't have the crude squawk, so maybe I should get it. What I often see is the pit stuck on a bid/ask while the emiNY is jumping around a lot. Do you think it is just my data or do you see the same thing?
yeah for WTI crude the pit trades back and forth in a 5-10 tick bid/ask and the screen might jump around a lot - although it rarely ever gets much out of line with the pit. Like I say, I only base my running winners decision on the pit. I find that for WTI (full contract) the pit leads. Pit, then screen WTI, then Brent. Never traded minis I'm afraid.
It's not your data AAA that's problematic. When a trade is executed in the pit there's a lag between trade and print. I don't know about NYMEX but in Chicago a trade cannot be quoted without a party to the trade "calling it out" to one of the handful of "pit reporters." The tape is a legally binding document. Thus $10 an hour pit reporters aren't allowed to guess or assume that price x just traded. One of the guy's who traded x will call out "radio, x!" and only then does x hit the screen of subscribers around the world. By the time that happens x2, and x3 may be also trading. While x2 and x3 are quoted automatically on the electronic contracts those prints are once again subject to manual delay on the floor.
I am on free trial for SP pit squawk box , i am intrested on any new comments about this ... ( i use tradersaudio )
No need to use a box...lots of artifical calls throughout the day in terms of buyers/sellers. Amazing these guys are able to sell a service that is rarely the primary market. A few years ago it was somewhat worth a little pit noise...now everyone offsets trades in the minis and these guys quoting absolutely nothing offer no insight when moves do happen. However, I will put a caveat on the previous two paragraphs -- the first 5 minutes and last 5 minutes of the Cash session. IF you have a good box, and you trade at that time of day, it can be useful. Otherwise I see no value at all.
I imagine if you want to get into squawk/noise, don't just do a month trial, find its useless then quit... plunk down the cash for a year or two then run with it.. I can't think of any discretionary technique that is useful with only watching/learning for a month..Almost anything would seem useless in that time frame.