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Market Closure due to Volatility
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Market Closure due to Volatility

  #1 (permalink)
Trading Apprentice
North Shore City, New Zealand
 
Futures Experience: Beginner
Platform: NT
Favorite Futures: DAX, CL
 
Posts: 1 since Apr 2012
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Market Closure due to Volatility

Hello all, was looking at what happened to the NFP report which came out last Friday and see that the ZB market closed for 5 seconds on the news release. From what I have gathered this is an automatic switching system at the exchange which does this due to volatility being "seen" at the time.
In this instance the market closed at 08:30:01 Eastern and reopened at 08:30:05 at around 24 ticks above the last seen candle on the 1 second chart.
What I would like to find out is how can the price continue to move whilst the market is closed?
If the market is closed due to volatility then fair enough but how can it be "closed" and then reopen at a significantly differing price?
It seems to me that these "closures" are causing significantly more damage whilst being closed due to traders being unable to exit trades.
Any insight into this would be appreciated,

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  #2 (permalink)
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  #3 (permalink)
Market Wizard
Germany
 
Futures Experience: Intermediate
Platform: Other
Favorite Futures: ES, YM, 6E
 
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Trading around/into important data

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This post has been selected as an answer to the original posters question Answer


Unless you have some profound knowledge about possible scenarios that can unfold with important data, you'll be better off being flat then.

Around data like the NFPs, liquidity/order flow dries up (= myriads of traders are either flat or only have limits/stops outside of the market depth you can normally see) before the announcement. The thinner the remaining market depth before the data was, the more slippage you will experience after the fact when the order flow explodes and/or leads to levels of market depth that you didnt expect before. Be grateful that you had a volatility halt; it is a sure sign that you and others would have been much wider off the mark if the exchange hadn't prevented these levels.

Btw: This doesn't only apply to the ZB, but also e.g. to index and forex futures.

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