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Trading big futures is just... cheaper.A lot cheaper.Also as above - small trader's is what - some like 10 or 15 % of the market volume.Most popular markets got high tick value and a ,,large''specification - like Kospi Dax Hang Seng Nikkei (NKD/NIY),GL or any others.No one cares about small traders... and even if they do care ( like KRX or Eurex ) they realise after some time... that it is still so small part of the market.So... futures market was - and it still is for big guy's...
Can you help answer these questions from other members on NexusFi?
They still refer to contracts as "cars," because originally the size of one contract was a railroad carload of whatever the commodity is. That's big.
I have no idea about the size of financials, either, but I do know that they were created to allow the big, big funds to have a way to offset their risks in the stock market by hedging. I was around when they were being created (although too dumb at that time to pay enough attention to the details. Still probably dumb, but at least semi-experienced....)
And sure, then we immediately had some seriously speculative use, too. And I'm sure we always will.
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Your thinking about everything in terms of today's internet connected world and electronic exchanges. Many of these contracts have existed for decades and as mentioned by others were designed for commercials not retail. Back in the 80s & 90s floor execution commissions for commercials were as high as $10/RT which for most contracts is equal to a tick. If you made the contracts smaller the execution cost would have been dis-proportionally large vs the value of the contract.
Any new markets that the CME create will be created for one single purpose - to make money for the CME.
The tick sizes (as per my prior post) and the margins are kept low to encourage the most participants.
So actually, the CME does indeed target the widest range of traders it can - and it will continue to do so. It makes business sense.
SSFs were an attempt to woo stock traders - but that fell flat. Be assured, if the CME can dream up a market and have the CFTC approve it, they will be all over it.
If you have any questions about the products or services provided, please send me a Private Message or use the futures.io " Ask Me Anything" thread
You have to understand why futures exist. This is a dumbed down version:
I have a product and I want to get the best price for it, there is customer who needs my product but they want to buy it at the best price for them. We go to an auction and contracts to purchase said product are sold. For the auction to work best there needs to be enough participants that are able to buy and sell to create liquidity. CME has done almost everything they can to create liquidity. They have done this by enticing retail investors to put their money into futures.
