Trade ES above the ask / below the bid.

Discussion in 'Trading' started by jjf, Jan 31, 2008.

  1. jjf


    I dont fully understand how or why large Traders are trading the ES at above the ask or below the bid.
  2. Surdo


    I don't fully understand why people post total nonsense on ET.
  3. large blocks print outside the spread because they cannot fill at the spread

    big players want in... or especially out and need to give up a tick (or two) for that to happen
  4. jjf


    It is a fair question.

    I have just downloaded a trial of Ninja Trader and an option in the T&S is to change the color of trades at above the ask and below the bid and it clearly shows this happening from time to time.

    It beats me
  5. <i>"it clearly shows this happening from time to time."</i>

    liquidity. ES is not endless size on the bid/ask, as the dome shows right now
  6. jjf


    Can you expand your thoughts please austinp
  7. On the ES dome right now we see size roughly 200+ to 600+ contracts at a strike. If someone wants to sell 499 at 1373.00 and market is fluttering there, trying to cheap out the last tick may cost them huge $$ on a missed entry or exit.

    Open interest on the ES is not unlimited as some people think. When block traders need to fill part of spreads, hedges or outright positions, one tick does not keep them from placing the trade.
  8. TSSOX


    this is a very fair question indeed and most don't know why.
    Here's 1 explanation, the easiest way to see this is watch the ER2 dome after hours when things happen in slow motion. A trade takes place at bid which is say 711.40 and then no trades for a couple of minutes but the bid moves up and another trade occurs at the higher price which is 711.50 but the T&S still thinks that the bid was 711.40 because there were no trades, it had not been updated, hence reports the new trade at above the bid.
    i think this is why?!

    On the other hand, during busy times, let's say you needed to offload a big block and the price is at 1373 and the bid quantity is less than your needs for the next 3 tiers on the other hand you don't neither want to go below 1371 to fill you big ordr, hence rather than going at the market which could give a fill below your min target, you'd place you sell order at 1371 and hence you're guaranteed to not get a fill below your min target. On the other hand since orders are filled based on FIFO, there is a good chance you may fill all you need at a higher price than your min.