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Trading the new CME E-Micro's (E micro) MES, MNQ, MYM, M2K and other micros
We will be updating the www.[AUTOLINK]ninjatrader[/AUTOLINK].com website with lower commission rates for all micro products as early as this afternoon but no later than Monday.
Risk Disclosure: Futures and forex trading involves significant risk of loss and is not appropriate for everyone.
It is true that the micro offers a virtually zero basis-risk hedge for the mini.
It is also perhaps true that the above quoted text from NT is classic broker-speak, bless them
"The benefit if this product is that it will generate more commissions for us if we 'educate' customers to be 'sophisticated' and use the micro as a position scaling-out or temporary partial risk-off hedge tool v.s. an open mini position"
For goodness sake, if the micro is that liquid and has equivalent commission-efficiency for the trader, then people will just trade the micro and scale in and out with greater granularity thanks to the smaller size. The mini will get crowded-out - to a degree - as a result.
ps, today, CME's reported earnings fell 17% Q1. They need this ES micro product to fly where their other micro-contract hopes have flunked. They are competing for retail revenue with the ETF universe and nano-CFD's of myriad specifications, and the tyranny of time-zone (they provide exchange services in products that are most liquid for only a fraction of the day when most retail accounts want to trade, and in products that are mostly of US-domestic interest).
The commission efficiency going to happen because 10 micros would cost you $4.10 vs 1 emini would cost you $1.89.
I like the idea of scaling in and out with these. CME presentation said that you can buy 1 emini and scale out with 10 micros to go flat.
I believe if you buy 10 micro then sell 1 mini, your position would be open but hedged.
But if you buy 1 mini then sell 10 micros, your position would be closed.
Disclosure: This communication is sent to you by NinjaTrader, LLC, a software development company which owns and supports all proprietary technology relating to and including the NinjaTrader trading platform.
If fungible, I wondered how they would deal with partial offset. There is no such thing as being long 0.6 ESU9 after selling 4 micros against a 1 lot long ES. And to convert a 1 lot ES position into 6 Micro's would be surely complicated at the clearing house? So the all-or-nothing approach you describe makes more sense. I wonder how the many retail trading platforms are going to deal with this? The two symbols net to zero, but only if in a 10:1 ratio.
- if many intraday traders get long ES over a 10 minute period, the eventual opposing ES sell order flow may only be evident in the micro order flow? Gorge in the ES, puke in the micro???
