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Stop Hunting - Fact or Fiction?
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Stop Hunting - Fact or Fiction?

  #61 (permalink)
Market Wizard
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choke35 View Post
That's a wrong conclusion.

2.3% of daily volume doesn't reflect the influence of these orders by any means.

At the moment CL is trading at a market depth of 1000-1200 contracts on either side.
I.e.: With 11k contracts you can blow off the entire bid or ask about 10 times a day if
you target the small change. Or "sweep it" as they gently call it ...

We are talking about 2 different scenarios.
2% becomes significant when your aim is to influence market direction by clearing out levels on the exchange.
2% block trades is meaningless because they are handled off the exchange so the 1 contract warriors populating the order book dont even notice.
What am I missing here?

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  #62 (permalink)
Market Wizard
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Grantx View Post
We are talking about 2 different scenarios.
2% becomes significant when your aim is to influence market direction by clearing out levels on the exchange.
2% block trades is meaningless because they are handled off the exchange so the 1 contract warriors populating the order book dont even notice.
What am I missing here?

The only trades without any impact are - by definition - noise trades.

a) With e.g. an average of ~2 contracts per trade in CL (https://futures.io/platforms-indicators/42923-stop-hunting-fact-fiction-3.html#post655005)
any larger trades potentially influence prices.
b) Combine a sweep trade vs retail sheep at the CME with an offsetting block trade at Clearport and you are
as close to a free lunch as one can get.

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  #63 (permalink)
Sharpening mental edge
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Grantx View Post
We are talking about 2 different scenarios.

2% becomes significant when your aim is to influence market direction by clearing out levels on the exchange.

2% block trades is meaningless because they are handled off the exchange so the 1 contract warriors populating the order book dont even notice.

What am I missing here?



Grant, using clear port or a dark pool enables a big boy to hedge positions which they take for the express purpose of providing liquidity.

There are no market makers in futures but it's effectively the same scenario.




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  #64 (permalink)
Market Wizard
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choke35 View Post
The only trades without any impact are - by definition - noise trades.

a) With e.g. an average of ~2 contracts per trade in CL (https://futures.io/platforms-indicators/42923-stop-hunting-fact-fiction-3.html#post655005)
any larger trades potentially influence prices.
b) Combine a sweep trade vs retail sheep at the CME with an offsetting block trade at Clearport and you are
as close to a free lunch as one can get.


rassi View Post
Grant, using clear port or a dark pool enables a big boy to hedge positions which they take for the express purpose of providing liquidity.

There are no market makers in futures but it's effectively the same scenario.

Sent from my iPhone using Tapatalk


@Grantx

@rassi 's example is the bread and butter of many HFT businesses that trade for own account.
My example ( b) ) is the bread and butter of many brokers with institutional customers or other kinds
of access to significant orders.

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  #65 (permalink)
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choke35 View Post
The only trades without any impact are - by definition - noise trades.

....
b) Combine a sweep trade vs retail sheep at the CME with an offsetting block trade at Clearport and you are
as close to a free lunch as one can get.

If I understand you correctly....that would be considered a "wash trade" and hence would be prohibited by the CME.

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  #66 (permalink)
Market Wizard
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Sazon View Post
If I understand you correctly....that would be considered a "wash trade" and hence would be prohibited by the CME.

Nope.

If a broker is responsible for buying or selling a certain amount of contracts for account of
a third party
, that isn't a wash trade.

The customer, e.g. a fund, couldn't buy/sell the large amount of contracts without being ripped.
So the transaction is delegated to the broker to buy/sell the amount on behalf of the fund by
using the regular CME order flow at suitable points in time. That's why strategical order book
sweeps vs small change are so attractive.

The second transaction (between the broker and the fund) regularly is a fixed price off-CME
transaction.

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  #67 (permalink)
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tpredictor View Post
Yes, stop hunting is very real. However, the entire market is hunting for all stops. It is basically liquidity hunting. It is not personal, however. It is every single trader.

to OP:
some good answers in this thread. So it's just liquidity. Some of these are stops and some are to initiate/exit...if you understand how markets work. There will always be Sell to Buy////Buy to Sell especially at extreme's.

either ways... Stops...r just one way for Liquidity driven events. And it's not 1-10lot stops....this is where majority of the Orders are lying. It's based on ATS. Average Trade Size.....which will dictate where most big orders are.

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  #68 (permalink)
Trading for Fun
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choke35 View Post
Nope.

If a broker is responsible for buying or selling a certain amount of contracts for account of
a third party
, that isn't a wash trade.

The customer, e.g. a fund, couldn't buy/sell the large amount of contracts without being ripped.
So the transaction is delegated to the broker to buy/sell the amount on behalf of the fund by
using the regular CME order flow at suitable points in time. That's why strategical order book
sweeps vs small change are so attractive.

The second transaction (between the broker and the fund) regularly is a fixed price off-CME
transaction.

So , basically the broker is acting as the fund's trade order executor, buys/sells all the contracts at various times and prices and sells/buys them to the fund at a guaranteed price.

So the broker is taking a bit of a risk, I would think. In return the broker must get a nice commission. Right?

It occurs to me that, as a retail trader, I would not want my broker to engage in such actions. I wonder if there is a way to find out.

Thanks choke35.

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  #69 (permalink)
Market Wizard
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wmueller View Post
So , basically the broker is acting as the fund's trade order executor, buys/sells all the contracts at various times and prices and sells/buys them to the fund at a guaranteed price.

So the broker is taking a bit of a risk, I would think. In return the broker must get a nice commission. Right?

It occurs to me that, as a retail trader, I would not want my broker to engage in such actions. I wonder if there is a way to find out.

Thanks choke35.

Right. But unfortunately, most brokers make their retail customers sign clauses in the fine print that allow many
sketchy varieties (like e.g. internalising orders or routing the order flow to (foreign) parent companies or other
affiliates).

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  #70 (permalink)
Trading Apprentice
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Too many newbs focus on some larger force being mean to them and taking their money by running stops.

The fact is that running stops has been, and will always be an integral part of market dynamics. Once you learn to identify high potential areas for that to happen, and what it looks like when it does happen (versus an actual new impulsive move), you're in a better position to profit as a short term trader.

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