In crude oil (WTI on Nymex) I've noticed that there is generally substantially more activity during the hours 6am to 11:30am Pacific Time, which corresponds to the trading hours on Nymex trading floor in New York.
This doesn't make much sense to me. If you look at the Wikipedia page for Globex, it says that about 80% of trading volume for commodity futures originates electronically, not on the floor. The electronic exhanges of course are open almost 24 hours, so why would activity be consistently greater during regular floor trading hours if only 20% of the volume takes place during that time?
Good answer, but I'm not sure it's accurate. A lot of electronic trading, particularly the large accounts, is supposed to be algorithmic/automated. I doubt these systems are turned on at 9am ET and turned off at 2:30pm ET every day.
Well, no big deal. Idle curiosity... I trade CL everyday. Since floor hours consistently provide the most movement, those are the hours I trade.
Just wondering why the floor continues to be such a dominant factor despite the electronic nature of today's markets. I did some lazy googling which didn't turn up anything. I suppose I could try tracking down someone in the industry if I really wanted to ...
Electronic transactions does not mean algorithmic origination, and most people sleep at night. Even if you look at how many orders are placed algorithmically, most of those are by hedge funds and such which are primarily being audited and maintained by real people, and thus -- during the day.
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Yes, but why would "waking hours" correspond identically to the pit trading hours? And also, I was under the impression that electronic trading bypassed the need to be filled on the floor. ... just trying to get a better understanding of the relationship between the electronic exchanges and the floor.
Last edited by mwtzzz; January 26th, 2013 at 12:14 PM.
It certainly does seem that is the influential region. Which is interesting, because theoretically anybody in the world has access to the electronic market, yet the rest of the world has an almost negligible impact, which means either there are no big players overseas or the big foreign players funnel their orders through some broker in New York.
Less-lazy googling provides a bit of a clue: according to the Globex reference guide (www.cmegroup.com/globex/files/GlobexRefGd.pdf), orders initiated on Globex can be routed to the floor. One system that does this is the TOPS which takes orders entered by brokerage firms or by customers, and directs them to the trading floor. This means some of the electronic trading volume goes through the floor. The question is, under what circumstances does this occur, and what % of the volume?