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Verbally quoting the Inside Market...for Scalpers mostly


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Verbally quoting the Inside Market...for Scalpers mostly

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  #1 (permalink)
Pittsburgh
 
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Ok. You're at the screen, you get a call from another trader, or your boss/backer, who maybe just left. He/she says, "What's the market in the ES?".....you look at your screen and see the above.

How exactly would you verbally respond, in the clearest, most informative way possible?


I ask because when I first began I was taught by CME pit traders. There was a specific vernacular to how we were supposed to quote markets and market action. It was my assumption this was the only way to do it....every trader I ever spoke with described markets the same way.

The first few months it all sounded like a foreign language...not just because of the way markets were quoted but also because the product and strategy was rather complicated....but eventually it became all I knew. Now, when I see some posts here describing markets in other ways....it sounds foreign to me.

So I'm curious to see what some responses may be. I assumed this was the only way to quote a market in any exchange anywhere.....but maybe I'm wrong and its just the way CME locals do it....or just the way it was done in my particular market.


So anyway...."WHATS THE MARKET???"

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  #3 (permalink)
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Interesting....

I could see this two ways....

1. (Pertaining to slower instruments, or slower trading times)
I would assume the relevant information would be pertaining to the best bid and best ask. Everyone in the industry would likely be aiming for this, so they would likely skip this part and get right to quoting the volumes resting at best bid / best ask, and then maybe include some information about the last trading volume and specify the bid or ask. I could see this being the information most relevant to describe the current state of the market. But in terms of "verbally discussing it" this would only really be relevant if we are talking about slower moving markets, or slower time periods on fast moving instruments.

2. Because I have seen the ES flip price levels 7 times in 1 second..... (Human Speed Hypothesis)
So unless you are the guy that used to do the micro-machines commercials back in the 80s, (Dude could rattle off 200 words a second) you will likely not be able to be accurate / and in real time quoting which price level the market is at. This leads me to believe that one would likely do a better service explaining to someone the current state of the market by providing a range. "The market has oscillated between 2000 and 2002 over the last 30 seconds" So if we are talking ES on the overnight session then yeah, I could see how someone could provide every detail with 5 minutes left for someone to scratch there chin and be like... "Okay, well I suppose in that case, I will do x,y,z" But if we are talking US cash open, or Close.... telling someone the current price level would be ridic.

Interesting topic. I will be curious to know the answer.

Ian

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iantg View Post
Interesting....

I could see this two ways....

1. (Pertaining to slower instruments, or slower trading times)
I would assume the relevant information would be pertaining to the best bid and best ask. Everyone in the industry would likely be aiming for this, so they would likely skip this part and get right to quoting the volumes resting at best bid / best ask, and then maybe include some information about the last trading volume and specify the bid or ask. I could see this being the information most relevant to describe the current state of the market. But in terms of "verbally discussing it" this would only really be relevant if we are talking about slower moving markets, or slower time periods on fast moving instruments.

2. Because I have seen the ES flip price levels 7 times in 1 second..... (Human Speed Hypothesis)
So unless you are the guy that used to do the micro-machines commercials back in the 80s, (Dude could rattle off 200 words a second) you will likely not be able to be accurate / and in real time quoting which price level the market is at. This leads me to believe that one would likely do a better service explaining to someone the current state of the market by providing a range. "The market has oscillated between 2000 and 2002 over the last 30 seconds" So if we are talking ES on the overnight session then yeah, I could see how someone could provide every detail with 5 minutes left for someone to scratch there chin and be like... "Okay, well I suppose in that case, I will do x,y,z" But if we are talking US cash open, or Close.... telling someone the current price level would be ridic.

Interesting topic. I will be curious to know the answer.

Ian


Thank you for the response. Keep in mind there are squawkboxes out there that verbally quote markets like the ES or faster.

I suspect many traders that learned on the screen or away from exchanges maybe never had a real need to quote verbally, either because they don't talk to other traders or its not necessary w/ their style. It's definitely true that the longer your timeframe the less you'll probably every talk about the inside market.

Also I should mention I'm not trying to call anyone out for being wrong. Maybe I'm wrong. I'm really kinda curious to see if there are any former CBOT or NYMEX locals out there that will quote the same way I do.

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  #5 (permalink)
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John47 View Post






So anyway...."WHATS THE MARKET???"

Dump the raw data in the ES for any given minute during the first hour. It moves so fast I bet your eye doesn't see and your brain does not register half the transactions.

In fact i will bet your software which prolly updates your screen every 10th of a second (or longer) doesn't even show all of them to you.

At least half of them are single contracts.

It was different before they allowed whatever rule it was that took the 100 lots and busted them down into smaller lots.

Before this change one could read the tape in a stock like KLAC and watch a big house walk the price up or down.

Not possible to read the naked (unadjusted/unaccumulated) tape in the ES now. Nay nay i say.

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mmaker View Post
Dump the raw data in the ES for any given minute during the first hour. It moves so fast I bet your eye doesn't see and your brain does not register half the transactions.

In fact i will bet your software which prolly updates your screen every 10th of a second (or longer) doesn't even show all of them to you.

At least half of them are single contracts.

It was different before they allowed whatever rule it was that took the 100 lots and busted them down into smaller lots.

Before this change one could read the tape in a stock like KLAC and watch a big house walk the price up or down.

Not possible to read the naked (unadjusted/unaccumulated) tape in the ES now. Nay nay i say.

Everybody just pretend it's the ZN.

What's the market?

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  #7 (permalink)
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Hi John,
Are you looking for the part where we drop off the higher digits and use the the lower digits close to the decimal point, and then tell where the pressure seems to be on the Bid and Offer? So, if you were looking at a market where it moving fairly slowly on low volume (not changing quickly)...would you want to hear me say "Ten-Fifty, 600 Bid, 200 Offer"?

Or, do you want to hear me say something else?

Cheers,
Eric.

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600 at ten-quarter by 200 at half!

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eric73 View Post
Hi John,
Are you looking for the part where we drop off the higher digits and use the the lower digits close to the decimal point, and then tell where the pressure seems to be on the Bid and Offer? So, if you were looking at a market where it moving fairly slowly on low volume (not changing quickly)...would you want to hear me say "Ten-Fifty, 600 Bid, 200 Offer"?

Or, do you want to hear me say something else?

Cheers,
Eric.

Hey Eric thanks for the response.

The way I was taught, the "higher digits" are the "handle" and it wouldn't be necessary to say them.

"Ten-Fifty, 600 Bid, 200 Offer"

Yes that's essentially what I was asking for, a quote on the inside market, or, how anybody else may quote it. Guessing by responses this isn't something that is salient for alot of folks on FIO, I kinda thought that to be the case which is why I specified "mostly for scalpers". I assume if you trade exclusively charts, indicators, or something uber fast moving...or never talk in real life to other traders there's less of a need.

From what I was taught, if I was asked to quote that market my response would be something like:

"Ten quarter BID on six hundred...200 AT ten half.....ten halves trading"

The part that was stressed to us is the differentiation between how you quote the buy and sell side. This is important if your in the pit, or just quickly communicating something about a trade you made or something you see happening. So it would go like this...

Buy side/bids = PRICE on QUANTITY
Sell side/offers = QUANTITY at PRICE

I imagine this looks like a small and maybe even inconsequential distinction to alot of you, and it's probably meaningless for your trading. For me, every conversation I've had about markets for the past 15 years has been with this and other associated vernacular....hearing things put any other way and my mind has to stop and process it. What's funny is among pit traders (and pit trained screen traders)....this becomes the way we talk about everything we buy or sell haha. Real Estate, cars, drinks at a bar.

"did you buy that Lexus?"
"Yeah, I was 54 BID, the salesman was AT 58 plus tax and title and I wasn't coming up, so I said I was heading over to BMW and he decided to come down."

I've actually heard that haha.

It could also be done like the above, without quantities if not necessary or not meaningful. "ten quarter BID AT ten half"...or simply "Ten quarter AT ten half". The important part is you name the PRICE you're willing to PAY....but you name the QUANTITY available for sale AT the price.

Do it a couple times and it makes sense. You want to know the PRICE people will pay....or the QUANTITY available to buy (for sale) at a price.

Alternatively, and a little faster depending on the situation, using the above example you could also quote:

"Ten quarter AT ten half, six hundred BY two hundred"
Bid price AT offered price, quantity BY Quantity.


Now that I start thinking about this....something was different at the CBOT. Maybe somebody who's spent time there knows. Something about the way they quote the sell side. I remember being in the pit one day and hearing someone call out an offer in some odd way, and someone on the other side of the pit respond "HEY THIS AINT THE CBOT".

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lax99 View Post
600 at ten-quarter by 200 at half!


That may actually be the CBOT way.

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