Flipping

[grantx]

The following is from a German site http://www.futures-trader.de/cgi-bin/webbbs/index.pl?noframes;read=63624

This is the explanation:

"Schatz 81 bid on 6,000.

Bobl 59 choice.

Bund 71 bid on 500.

He takes the bobl 59 offered on 300

and then flips the Schatz 81 offered on 5,000,

Bund at 70 hard and

the Bobl 58 and 57 offered in quick succession."

Could someone explain this in simple language, line by line, from "Bobl 59 choice"?

Grant.

 

[chump]

in basic terms he is using his size to buy and sell against himself in the knowledge that the subsequent movement on that instrument will move another instrument in such a way that he can profit on it.

 

[Directional]

Bund bobl shatz are closely correlated, many prop traders will be spreading these markets, ie, long bund, short bobl trading the elasticity in the spread. the flipping process is a play on the spread differential and the behavour of a specific group of traders designed to push prop traders offside in their spread trades - most spreaders are only trying to take a single tick or so, so conversely they cannot take much heat. by pushing the spread around by bidding one or two of the three markets up or down, it forces some traders out of their positions which fills the flipper on his trade exit.

 

[klw]

In agreement with the above 2 replies but the really clever bit IMHO is that because he has large volume on the bid and the offer he quickly gets a feel as to market direction through the speed of his fills and subsequently is in ( a no doubt large ) position when it finally breaks out.

He is in effect creating his own market within a market. A very clever guy.

 

[bond_trader1]

So, what's to stop the flipper being flipped?

 

[Directional]

nothing really, and he sometimes does get hit by institutions who take his size.

The reason the flipper does well is because he understands very well what prop spreaders are doing, and he knows the three markets and the correlation that he flips in like the back of his hand.

If you know what the flipper is doing, and you arent afraid to try spoofing him or hitting him with 10,000 contracts, it could be done. in theory. on the other hand, sometimes those 5k bids he posts, he does actually want a fill on...

 

[$spreader]

Yes that is right.However most of the flipping in these particular contracts is now done by computer programmes funded by very deep pockets.It's also not new that they run parallel models constantly assessing time and sales data to work out by clip size what the smaller traders are doing and based on a time element will put the squeeze to them.It's called market profiling and has been going on for ages.

 

[Directional]

Yes that is right.However most of the flipping in these particular contracts is now done by computer programmes funded by very deep pockets.It's also not new that they run parallel models constantly assessing time and sales data to work out by clip size what the smaller traders are doing and based on a time element will put the squeeze to them.It's called market profiling and has been going on for ages.

I've seen some prop traders using a prog that analysed the DOM and displayed a "queu" for each price showing the makeup of orders and how many and what trade sizes are in the FIFO queu before yours.

I think it was called OrderQ or Market View or something like that

 

[Directional]

well, I know for sure its not just Rotter doing the flips, as I know Paul and there was a period when he took a two month holiday during which time the flipping continued. Harris Brumfield is involved in some sort of multi-price flipping, as are, i'm sure, plenty of others who we dont know about.

as to what I think... the flipping doesnt affect my style of trading, so i'm neutral to be honest. I understand why some prop traders are p!ssed at "the flipper" whoever it is, but conversely if I or indeed any other trader knew how to do this, and had enough money, i'm sure we'd all be flip flipping away!

 

[insight2]

I've recorded some action, possibly similar to "flipping" or "spoofing", in emini Dow Jones on video. Only thing is file is more than 30 Mb. It happens there about 2 to 3 times a week, not more.

I guess, strategy for the small trader would be to join the "flipper", rather than to fight him.

Very interesting thread.

cheers, dejan

 

[DaxDestroyer]

Flipping is mainly used to get rid of the small insects (traders) trying to ride the horse on its way
It cleans the market from the guys who can't stand the heat of a 2 or 3 tick move.
Sometimes you can see it BEFORE, watching the book as it changes

 

[DaxDestroyer]

I've recorded some action, possibly similar to "flipping" or "spoofing", in emini Dow Jones on video. Only thing is file is more than 30 Mb. It happens there about 2 to 3 times a week, not more.

I guess, strategy for the small trader would be to join the "flipper", rather than to fight him.

Very interesting thread.

cheers, dejan

Put it on YouTube or something and post the link

 

[insight2]

DaxDestroyer, I guess you were small trader at some point.

I would, but it seems that there is size/length limit on YouTube. Plus, I need time for other things.

cheers, dejan

 

[DaxDestroyer]

DaxDestroyer, I guess you were small trader at some point.

I would, but it seems that there is size/length limit on YouTube. Plus, I need time for other things.

cheers, dejan

This is exactly the reason, why I am aware of that I'm still small, only the market itself is big.