a commodity is moving up and down as if it was the most liquid forex instrument in the world ? in the last few days I have been seeing some of this. and although I applaud the parties involved with keeping an orderly market I ask them and the world why can't they do this all the time in all the derivative products out there ? why is there so much more slippage more often than not over time in anything other than forex or perhaps the ES or one or two fixed income products ?
1) Those "parties" aren't worthy of applause. 2) A market's depth is only as good as the non-speculative customers that participate in it. 3) Financial/paper commodities have better liquidity and usually less volatility. Those two things are more attractive. There is also in "infinite supply" of the underlying commodity. Physical commodities have less liquidity and greater volatility because the underlying commodity is generally finite/constrained. Nobody is bragging about doing high-frequency algorithmic trading in cocoa nor pork bellies.