Mini-gold vs. micro-gold vs. regular gold futures: any comments?
Just curious if anyone has any experience trading Micro and Mini-gold futures, MGC and YG, respectively. Micro is 1/10 of GC and Mini is 1/3 of GC. I believe MGC trades $1 per tick and YG trades $3.33 per tick.
I came across these 2 instruments looking for a less-capital intensive instrument. Not ready to trade GC, but was considering mini or micro version.
My question: what is the volume like there? What about slippage? fills? spreads? There is very little info on the net so any comments will be appreciated.
The following user says Thank You to anituchka for this post:
I traded a little bit of YG a few years ago, but I've only traded GC since. Based on my experience with GC, I'd be hesitant to hold these low volume contracts overnight. YG has shorter trading hours and sometimes GC moves quite a bit in the time YG is closed. Also even GC slips quite a bit at times. I slipped $3.30 on a stop over last Thurs night, so I imagine it can get pretty bad with these smaller contracts.
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The bid/ask spread is a little tighter on YG than MGC, but MGC is 1/3 the size of YG, and therefore more sensitive for position-sizing. So it just depends on what you're trying to accomplish, really. MGC will track GC, but YG will track ZG - so even though the percentage movement will be virtually identical from YG to GC, the actual entry/exit prices will not.
QO mystifies me - I have no idea why anyone would bother to trade it. CME/COMEX really designed a bummer of a contract on that one, & it shows in the near-complete absence of volume. The wide spread & large tick size of QO & QI make the risk of trading one of them equally as large or larger than the full-size contracts they are supposed to be downsizing. So the only thing they end up downsizing is the reward if you win.
Hence the popularity of YI & YG by comparison . .
I think the CME realized this, and created MGC about a year ago to try to win back business from the YG crowd. IMO, it's a good, viable alternative - and flexible. It can be used as a component to create very precise spreads, and is fully fungible with GC (meaning that it can offset an open position in GC at a 10:1 ratio & vice versa).
I wish CME would do the same thing in the case of SI/QI - and maybe they are contemplating it (let's hope).
Anyways, that's my $.02 worth . . YG & MGC are both viable contracts - just depending on what you need, & what you are trying to do. As with all downsized-contracts, though, liquidity is lower, so don't expect precise executions if you depend on stop orders. Manually entered limit orders will get you in & out cleanly, though.
Hope that helps . .
The following 2 users say Thank You to ddouglas for this post:
Won't touch it again. I'd rather take the risk with a more liquid product.
Micro gold does not track the full gold contract in the same way as the micro currencies track the full currency futures contracts.
The brokerage fees are also not one tenth of the full size contract so it's lose lose in my view.