Was talking to a broker last night and was told that future's traders are drying up. Not the emini/index futures or the metals. No, I am talking about the grains, meats and tropicals. I see the coffe thread, but not much about the others. Just curious is this was true. These are what got me into the markets, not stocks. Just trying to keep up to date as I still have a passion for them even though I don't trade them anymore.
prob got tired of paying huge commissions for those non electronic markets and did not like the slippage and time it took to get their executions ...
I agree with setharb - pit-traded products are just no way near as attractive for retail traders compared to electronic stuff. The prices are opaque, fills are terrible, and commissions are higher due to higher cost & overhead. The exchanges in question should go electronic - they would then see volume soar, just like we saw with the Emini. I personally would trade the commodities FAR more if they were electronic. I have often passed on a trade because I have a competing trade in an electronic market, and I always go with the latter. So these guys are just shooting themselves in the foot. It's those annoying NYC and Chicago locals who want to preserve their no-talent monopoly on order flow - they run the exchanges so they don't want to give up their nice little earner, just like the NYSE specialists. IMO Eurex USA should just list *all* pit-traded products and put these clueless dinosaurs out of business. Then they will have to learn how to actually trade rather than just front-run paper and back away from anything bigger than a 1 lot.
I used to trade commodities actively, but then the state of the art in technology moved on. The thought of picking up the phone to call an order in to my broker is sooooo 19th century. [Richard]
The ONLY way to trade an ag product is to rent a badge and be in the pit yourself. No way should an off the floor retail customer mess with any of these products.
Coffe, cocoa and sugar are screen traded on Liffe but not available through Interactive Brokers. Email ibmgmt@interactivebrokers.com if you want access to these contracts.
Can you imagine paying a minimum of 19.95 for a ag product. Even if you do it electonically it and the company sends it to the CUBS or the electronic broker in the pit. There can still be a lag time and you do not get market depth.
... that minis were attempted in hogs & coffee without much success. I guess as long as commericals are forced to hedge, the lack of public interest is never going to kill the floor trading business since they have captive liquidity. It is uncertain that retail interest in commodities will really ever take off in meaningful quantities - but I leave this to those who lived through the 70s to comment.
Since 90% (or more) of the volume in futures contracts represents pure speculation, those traders are going to go where the liquidity is. And that means financial futures, for the most part.
The London Commodity Exchange installed terminals for their new electronic trading system, and the pits were empty within a week. The pit traders never returned. [Richard]