No registration required! (Why?)

Dow 10/11


Dow Market Profile chart 11-Oct-2006

Click image for original size
No Description Entered
Sorry in advance if i misunderstood this chart , but dint the DOW's high yesterday was 11878
Yes the DJIA was 11878 at its high yesterday but Alleyb is plotting ont of the Dow Futures here, probably the YM. The YM's high yesterday was 11936 which is consistent with the saling that he has done on the chart.
its actullay the 10$ floor contract rather than the YM but thats little difference. Just the same as looking at the SPZ6 or the ESZ6

on a slightly different note but I know that this will get DayTrader going
all the post 1998 guys think that its the electronic that wags the tail of the dog and are still looking for the floors to die. Well I repeat again they fail to understand that the floor is still the dog and where when certain commercials want visibilty they show their hand and quite apart from anything else its where the option market is plus the last and real reason why the floor continues to exist and even dominate is because the regulatory controllers want it to exist and very last but not least it is the only place where you can conduct business when the electronic platforms go down.
It is just another version of the Liquidity Mirage the title of which was my article in Futures Magazine October issue.
Have you noticed recently that both the CME and the CBOT electronic failures has happened more frequently recently and frankly is likely to continue for they have not sufficient bandwidth
Alley,

I know you think there is a supposed Liquidity Mirage and that the floor is superior, but if that is the case why is all the volume moving to the screens(look at the volumes traded in the ags and energies over the last couple months). I have traded on both Chicago exchanges and screen is the far superior. It has opened access to many more market participants and this has provided a much larger liquidity pool. In reference to the liquidity mirage that you think happens during economic numbers the same thing happens on the floor all the traders just don’t bid and offer until they know which brokers are holding paper and can lean on those orders. Once the options totally move to the screen the days of the floor will be over. It makes sense to close the floors and take the money need to run them and build an even better network. The floor is an old technology that will soon go the way of the horse and buggy.
quote:
Originally posted by alleyb

...I know that this will get DayTrader going...


quote:
...the floor is still the dog and where when certain commercials want visibility they show their hand

And when they don't want visibility they use electronic. I agree, when you want visibility you can do so with "apparent" transparency. But you could also do that by trading electronically and immediately issuing a statement about what you are bidding or being filled on. You don't need the floor to get the visibility.
quote:
...the last and real reason why the floor continues to exist and even dominate is because the regulatory controllers want it to exist...

There must be a reason(s) why the want it to exist. Do the regulatory controllers have an easier job with the floor being there? What about markets that have never had floors but went straight to electronic? What advantage/disadvantage is the existence of a floor for the regulators?
quote:
...and very last but not least it is the only place where you can conduct business when the electronic platforms go down.

(You're only allowed one "last" reason
)
I can't argue with you on this. In the event of a power failure or system failure it is the only place that you can transact. However, what happens when all tele-comms go down as well? How do you call your orders into the floor? It's find having it there but if you can't get your order to them it's not much good.
quote:
It is just another version of the Liquidity Mirage the title of which was my article in Futures Magazine October issue.

Is that article available to read online?
quote:
Have you noticed recently that both the CME and the CBOT electronic failures has happened more frequently recently and frankly is likely to continue for they have not sufficient bandwidth

I have noticed that but didn't know it was because of bandwidth problems. Bandwidth problems, however, show that the electronic contract is growing faster in popularity and demand than they expected and budgeted for - in terms of bandwidth - which is a vote in favor of the electronic part of the exchange.
quote:
Originally posted by bsd

...In reference to the liquidity mirage that you think happens during economic numbers the same thing happens on the floor all the traders just don’t bid and offer until they know which brokers are holding paper and can lean on those orders.

I agree, traders are not going to take unnecessary risks to provide liquidity to the market out of a philanthropic sense of providing liquidity. Market makers that guarantee liquidity are under the same obligations in both pit and electronic.
the article is available either in the October Futures Magazine off the stands or for login at Futures Mag

Due to copyright I cannot post it here but if you email me I can perhaps forward you a copy.

Just as an additional to the floor vs electronic debate open interest in the big s&p contracts is roughly 600k and the emini 1.4 million. so on a restated basis the floor still has it. You know since 1998 I have been having this debate and still have an open bet with one poor Gentleman as to when the CBOT would close the bond floor. 7+ years on and the floor still exists. I dare say that eventually the floors will close but I am still willing to take the bet that they survive far longer than most would expect.
The electronic world has brought about many benefits not least of which is cheaper access to more players but it has also brought about a much higher degree of intra day price volatility than would have previously been the case and I believe that this is in fact due to in MP terminology the other time frame trade known as the opportunity time frame trader who is neither a short term nor a long term horizon trader who does not even care about swing nor position trading. They are the new local but the difference is that rather than being the faciltator of trade they are in fact detrimental to the price discovery activity of normal ebb and flow trade and are instrumental in the current new vogue of whoosh then sleep then whoosh then sleep attitude in the market
quote:
Originally posted by alleyb

I dare say that eventually the floors will close but I am still willing to take the bet that they survive far longer than most would expect.

LP's still exist but how many music lovers listen to them?
quote:
The electronic world...but it has also brought about a much higher degree of intraday price volatility than would have previously been the case...new local but the difference is that rather than being the facilitator of trade they are in fact detrimental to the price discovery activity of normal ebb and flow trade and are instrumental in the current new vogue of whoosh then sleep then whoosh then sleep attitude in the market

I don't think that you are saying that they are detrimental or negative to the market but just that they disrupt the previous pricing model that used to work before they were around.

I assume that no rational person would criticize the volatility that they bring about. Those that can adapt survive and if there's one thing that's constant about the markets that's change.
Alleyb,

Looks like the days of the floor are numbered. According to the WSJ the CME will close it's floor and remove the remaining pits to the CBOT. It is only a matter of time before the pressure from the shareholders to cut costs will be the end of the floor.

You have to remember that the efficiency at which traders can execute orders on the floor (for their own account or others) cannot be improved. They have already optimized it to the max over the hundred or so years that it has existed.

The electronic exchanges are in their infancy. How long have they been around for? 10 to 15 years seriously and maybe up to 25 years if you include the first incarnations - I'm guessing here and would welcome a correction.

Electronic exchanges are having billions of dollars of development capital poured into them and the bandwidth and speed of bandwidth and speed and reliability of the systems is always being improved. Is it Moore's Law that says that computers will double in power every 18 months?

Over our lifetimes we will look back in 20 years time and wonder how we ever did business over those slow and unreliable exchanges that exist today.

In fact, in 20 years time I'm going to email everyone a link to this thread and remind them about this conversation.
Actually Elite it is available if you read the MP as it unfolds in terms of what used to be referred to resposnive and initiative activity. It does require a degree of subjectivity due to the fact that you cannot be 100% certain but it is good enough for the purpose of establishing the dominant trader and their influence on the value.
In other words the footprint is there you just have to understand what it looks like in terms of the patterns that unfold.
As to why they don't make such information available its because the commercials have no interest in disclosing in fact they would far rather remain these days hidden from view in reality they would for the volume not to be disclosed let alone the open interest. The exchanges still to this day actually report open interest one day in arrears. It used to be for the fact that it took time to collate the info. These days the excuse is possibly because all too frequently trades are missallocated and remain in limbo at the execution broker before being transferred to the clearing broker.
Rather than worrying what should be provided in the way of info it is better to just work with the tools available and be grateful that at least we have that amount of info available to us