Saturday, March 26, 2011

US$130k commission!

Overheard at the hawker centre during lunch break about a very big scalper incurring a comm of US$130k trading the Nikkei on Tuesday when the Nuclear reactor exploded in Japan after the earthquake and tsunami.

It was a hectic day for traders with good volatility across all markets, SGX Nikkei traded more than 4x the normal average daily volume at close to 400,000 with plenty of panic selling. If this trader was to trade the SGX Nikkei alone, he would have contributed about a quarter of the volume! Amazing, a human Algo!

It's rather unbelievable to incur such a high comm, probably this trader hedge against Osaka Nikkei, Minis and Topix. Heard that he made US$250k and lost it back, thus was not able to cover the comm incurred.

There are many big scalpers out there, one that I know traded an average daily volume of more than 5,000 lots in the Tw contract. His monthly volume rebates come up to US$20,000 to US$30,000 a month from the Exchange. His strategy is to trade as much as possible without losing money, the monthly rebates will be his income and profit being additional bonus.

These big traders have negotiating power to bargain for rebates or better comm, an edge that small traders don't have.

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