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Is there a finite number of contracts per a futures instrument ?
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Is there a finite number of contracts per a futures instrument ?

  #11 (permalink)
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forrestang View Post
I don't think that's necessarily true. In theory, several groups of people could transact at two prices forever. As long as there is a buyer and a seller willing to participate at a given price level, it could happen.

We've all seen price move on 10 lots, or 10,000 lots. In theory, instead of 10K needed to move a price, it could just as well be 10,000,000, or even 100,000,000. It could go on forever hypothetically. How many get traded is simply a matter of how many buyers and sellers are willing to transact at a given price.

It sounded like the OP was asking if a finite amount of contracts exist, and no more can be traded than that? And the answer to that is NO. As long as there is a buyer and a seller, they can trade. To me it seems looking at it that way, there is no limit to what CAN be traded, just need a buyer and a seller.

If you want to trade, a margin is necessary. For example, if you wish to buy/sell 1 contract of CL an initial deposit of $ 5,610 (performance bonds) is required.

You cannot trade without margin, and therefore an infinite number of contracts requires an infinite amount of money.

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  #12 (permalink)
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Fat Tails View Post
If you want to trade, a margin is necessary. For example, if you wish to buy/sell 1 contract of CL an initial deposit of $ 5,610 (performance bonds) is required.

You cannot trade without margin, and therefore an infinite number of contracts requires an infinite amount of money.

Well I guess in the strict sense of "infinite," then nothing man-made is infinite, as there aren't "infinite" number of people in existence. But, as the OP asks, "Is there an infinite number of contracts per futures instrument," what I'm saying is that all that is required is a buyer and a seller...... to which the answer is: As many buyers as sellers.

This is one of those semantical discussions that often occur on trading forums, such as whether or not one is actually predicting vs. reacting, or buy low sell high.

I think the OP was asking if there are a set number of contracts that can be traded? As in does the S&P allow more than 10 million contracts to be traded on a given day for example. And my answer is: As long as there exists a buyer and a seller willing to transact at a given price, then they can trade.

So two people could sit at the same two prices and trade a million contracts at all day if they desired.

The next day, two different people could sit on those same two prices and trade 100 million lots there if they wanted. There is no SET amount. If an INFINITE amount of aliens from every corner of the galaxy all of a sudden decided they wanted to trade the S&P, they could, as all that is required is a buyer and a seller.

OBVIOUSLY they would need proper margin to place a trade. And they would also need a broker, computer, etc.

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  #13 (permalink)
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forrestang View Post
"Is there an infinite number of contracts per futures instrument," what I'm saying is that all that is required is a buyer and a seller...... to which the answer is: As many buyers as sellers.
...
I think the OP was asking if there are a set number of contracts that can be traded? As in does the S&P allow more than 10 million contracts to be traded on a given day for example. And my answer is: As long as there exists a buyer and a seller willing to transact at a given price, then they can trade.

That's not what the OP is asking. He is asking, "are futures like stocks, in that there are a finite number of shares available for the public to purchase?" and Fat Tails has correctly answered, "no." There are an infinite number of contracts which can be floated, and what is required is margin. Contracts are "written," unlike shares, which are "issued."

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josh View Post
........ There are an infinite number of contracts which can be floated..........

That's what I've been saying for about 4 posts now?!?!?

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  #15 (permalink)
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I'm sorry to resurrect this thread, but I have been studying Peter Davies course on orderflow, which also supports the idea of infinite potential futures contracts in my understanding, with liquidity being the key rather then supply and demand. The question I have which I joined this forum to ask (after lurking for months) is if there is no scarcity in futures unlike stocks, does this mean trading philosophies based on supply and demand are invalid in futures? In particular is the Wyckoff methodology and theory invalid in this environment? I cannot tell if Wyckoff theory presents the macroscopic picture of action on the DOM and T&S or if those that trade futures successfully with it are just succeeding through intuition and rationalizing through a flawed belief system like the followers of Elliot Waves or Gann astrological methods.

Wyckoff to me makes sense with finite trading instruments but I dont want to waste years of my on this philosophy if it does not pertain to futures, which is all I plan on trading.

regards to all, love this forum its a goldmine compared to others

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  #16 (permalink)
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Very short answer to OP: no

Both futures and option trades are basically contracts that are created between 2 parties, thus they are not limited in numbers as long as there are people willing to buy (and sell) them. When there are more buyers than sellers of existing contracts then a new contract is created.

Using an analogy it is like asking: Are prenuptial agreements limited in numbers?* or Are life insurances limited in numbers?

*this is of course limited but you get the point, I hope

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  #17 (permalink)
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Your question seems to remind me of bitcoin every time I read it. Just a thought.

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  #18 (permalink)
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forrestang View Post
The simple answer is no, there are infinite number of contracts available to be traded for the futures. Although that doesn't mean that there are an infinite number of contracts available at each given price. It's totally dependent on the limit orders that are resting at/above/below the current bid/offer.



The number of contracts available at each price are simply dependent upon how many people are willing to "offer" or "Bid" the market at any given price.



As someone "hits" into a bid or offer, the number of contracts available are determined by how many people are willing to offer/bid limit orders at that given price.



Price goes up because there are more people wiling to hit into a current OFFER than there are people willing to offer/sell to those people that are actively "hitting" into the offer with market orders. Although at all times, there are an equal number of buyers to sellers........ if all that makes any sense?!?!?!



Equal amount of buyers and sellers at any given time. Just more aggressive buyers or sellers (willing to lift the offer or step down to the bid) to which cause prices to tick up or down.

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