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Stocks & Commodities V. 24:4 (71): Futures For You by Dan O'Neil

Stocks & Commodities V. 24:4 (71): Futures For You by Dan O'Neil

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Stocks & Commodities V. 24:4 (71): Futures For You by Dan ONeil

INSIDE THE FUTURES WORLD

Want to learn how the futures markets really work? Dan ONeil, a principal at online futures and forex broker XPRESSTRADE (www.xpresstrade.com), responds to your questions about todays futures markets. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C.

EXECUTION VS. CONFIRMATION

Though the futures industry continues to move toward more electronic trading, many important commodity futures continue to trade in the traditional, open-outcry pits. A few examples of hot commodities trading primarily or even exclusively in the oldfashioned pits include gold, crude oil, silver, copper, coffee, and sugar.

Happily, technology has helped improve the routing of orders to and from the trading pits; in fact, a good number of orders can be sent directly to electronic devices operated by floor brokers standing in the middle of the action. But the inescapable fact is that human beings ultimately are executing the orders. And during periods of heavy volume or extreme volatility, these folks can quickly become overwhelmed. Whereas you might have a confirmed fill in a second or less when trading a fully electronic product like the e-mini S&P, the process may take considerably longer in an open-outcry market. As a trader, you have to be aware of this and set your expectations accordingly.
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