Eine "etwas" ANDERE PERSPEKTIVE
Eine "etwas" ANDERE PERSPEKTIVE:
from EliteTrader:
QUOTE:
Joe Ross
Junior Member
Registered: Mar 2004
Posts: 13
05-07-04 09:55 AM
What changes the market? Part 4
Part 4
Other changes in markets
There are many ways that markets change. In 1997 the multiplier for the S&P 500 stock index was cut in half. Since then, we have seen the introduction of the e-mini S&P 500, the Nasdaq Index, the e-mini Nasdaq, the e-mini Russell 2000. Along with those changes at the CME, came the introduction of the Dow futures at the CBOT, and now the introduction of a mini Dow.
Each time an exchange introduces a new contract, it ultimately affects the markets because it brings in new participants. If, when, an exchange changes the rules, or even the margin requirement, it has an effect on the price action. Since markets are made up of those who participate in them, we see changes taking place accordingly.
The most recent dynamic change in markets has been the inclusion of markets traded electronically. The mini Nasdaq, and the mini S&P 500 have seen the most dramatic changes of any other markets since the introduction of all-electronic trading. Has all-electronic trading affected the way you trade in the markets?? Absolutely - and in more ways than you might initially suspect.
All-electronic trading in U.S. markets has brought in many new traders both in the U.S. and from overseas. What at one time were prohibitively high telephone expenses are now non-existent because of the ability to enter orders electronically.
If I may digress a moment, consider the following changes in my own trading career.
When I began trading, it was common to pay $100 and more/round turn/ contract to enter an order into a market.
After a long time, I was able to find a “discount broker” who allowed me to trade at $65/round turn/contract. Can you imagine how many traders that kind of commission would eliminate from today’s markets? That would change the participation, wouldn’t it?
Data was available to me in two ways: 1. I could get the prices from the newspaper the following day. 2. I could call the broker and get the prices from him once the markets had closed.
Wanting to be on the cutting edge of technology, I opted to call the broker at the end of trading to get the prices. Big deal! Right?? However, when I began trading it cost $4.85 for the first 3 minutes and then some amount per minute thereafter to call New York, and it cost $4.35/minute to call Chicago. I lived in California at the time, and if all I did was to call Chicago 5 days/week in order to ascertain commodity prices, it could cost me $21.75/week. Based on 4-1/3rd weeks/month that amounted to $92.53/month. Of course, that was if I talked for only 3 minutes to get all of the prices I needed. I can tell you this much for certain: My telephone bill for calling the broker to get prices was well over $125/month. To give you an idea of what that meant, the mortgage payment on the house I lived in after paying it down to $19,250 from $28,500 (4 bedrooms, 2 baths, living room, family room, dining room, kitchen), was only $100/month. In other words I was paying more for data, than I was to live in a lovely new home. If you think the price of data is high today, on an inflation adjusted basis, I was paying far more than you pay today. The lowering of the cost of trading has made it possible for many more traders to consider the markets than ever before. This, too, affects participation.
Getting back to all-electronic trading:
The low cost of data, and the low cost of commissions, and the elimination of long distance telephone fees because of the Internet, has made it possible for people from all over the world to trade in markets they never dreamed of before.
So the number of participants in the markets, especially those trading all-electronically has had a significant impact on the way the markets trade.
Take for instance a recent happening in the markets. In the Fall of 2001, the SEC issued a ruling which stated that unless a trader had a margin account of $25,000 or more, they would be severely limited as to the number of electronic day trades they could make.
Suddenly, thousands of stock market day traders began opening accounts in the futures markets where margins are much lower for trading stock index futures. Not only are margins lower, but so are commissions, and there is no limit on number of trades. These were mostly traders who had been trading the all-electronic Nasdaq stocks. Why they chose to flood into the e-mini S&P is probably because the S&P 500 is more well-known than the mini Nasdaq. In any event, this flood of traders into the e-mini S&P made it almost impossible to trade and win. Why? Because the stock traders were accustomed to making from 80 to 120 trades a day, trading for what they called a “teeny.” A teeny, prior to the decimalization of stock prices was 1/16th of a point (.0625 cents). Can you realize how exciting it was for them to trade at $25/tick?? All they needed was 1 tick, to make money. These ex-stock market traders were in essence scalpers, looking for 1-2 ticks and then out. Suddenly, the e-mini S&P trends simply became corrupted. Risk became very high. Unless you increased your stop size to where it would be uncomfortable for many traders to trade, you stood to lose on most of your trades. When the market moved ahead 3-4 ticks, it suddenly moved back 5-6 ticks. Why? The scalpers were taking profits. Overall, prices would trend, but the trend would be extremely erratic compared with the way it had been in the past.
UNQUOTE
Gruß, hajo
Dieser Beitrag wurde bereits 1 mal editiert, zuletzt von »hajo« (17. Mai 2004, 22:20)