Platform to Trade Foreign Markets

Discussions about the testing and simulation of mechanical trading systems using historical data and other methods. Trading Blox Customers should post Trading Blox specific questions in the Customer Support forum.
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joelnelson
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Platform to Trade Foreign Markets

Post by joelnelson »

Hello,

I request suggestions and recommendations about what trading platform offers Electronic Executions on the following Foreign Markets:

ALL London Metals (LME)
1.) Aluminum
2.) Copper
3.) Tim
4.) Lead
5.) Nickel
6.) Zinc

MATIF Softs and Grains
1.) Milling Wheat (CSI symbol BL2)
2.) Rapeseed Oil
3.) Rapeseed
4.) Corn

I am presently executing through Interactive Brokers. They do not offer executions on these markets.

Thank you for the suggestions,
Joel
7432
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Post by 7432 »

the reason IB won't let you trade those markets is because the CFTC hasn't approved them for US residents.
you can get a list of approved non-US markets at the bottom of the IB product listings page.

I've tried for years to get a straight answer from the CFTC about how to trade those markets. nobody at the CFTC is quite sure about the resident vs citizen thing. IB has told me it is a US citizen thing.
or it might simply be a matter of becoming a member of Euronext and the LME, or just moving to Aix en Province.
or maybe even incorporating in Bermuda.
sluggo
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Post by sluggo »

Abraham Trading Company is based in the USA (Texas). They are registered with the NFA and the CFTC. According to their website, Abraham trades metals at the LME.
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svquant
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Post by svquant »

I think it is more that the electronic facilities of LME and the markets made there are behind other markets. Thus IB doesn't participate (i.e. is not a member) when you must have a floor broker to get a good execution.

Many CTAs in the US trade LME, just be careful on what you use for slippage.
AFJ Garner
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Post by AFJ Garner »

I use MF Global and their ghastly interface MTrade. You can not place LME orders through MTRade - you have to call the dealing desk. You can not deal directly (electronically) with the market through MF Global - at least not through MTrade. Ask MF Global whether one or other of their front end applications allows direct access to the market.

The dealers at MF Global execute your orders through LME Select - not the fixed time ring sessions.

On initiation you give a verbal order to buy or sell the relevant number of contracts in "3 month Zinc" for example without the need to specify an actual prompt date. On exit you need to buy or sell the exact prompt date that you hold - for instance I am currently long Lead and Zinc with a prompt date of 2nd Feb 2010 and Aluminium, Aluminium Alloy and Nickel with a prompt date of 6th April 2010.

As these are forward contracts, even after you exit a position, both long and short appear on your statement until the relevant prompt date when both disappear.

Rightly or wrongly, I base my signals off the rolling 3 month prompt price available in CSI even though after entry, my position will be in a progressively shorter dated prompt date.

This information may (or may not) be of help to you. It will clearly be of little help if you are a short or very short term trader rather than a position trader such as I am.
zacharyoxman
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Post by zacharyoxman »

AFJ Garner describes the method perfectly.

I have not found a platform yet that allows electronic executions on LME market.

It helps immensely to have strong relationships established on the Global Trading Desks at your specific FCM.
7432
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Post by 7432 »

so no answers on the MATIF contracts?
ages ago when I cleared Man Int they told me they would trade any contracts for me, even physicals, acting as a sort of bucket shop if an actual futures market didn't exist.
AFJ Garner, it would be interesting if you could ask MF if they would let you trade the MATIF contracts. I tried to get an answer before from MF but as a non customer they wouldn't play.
maybe they would clear the MATIF trades as a house position and just debit or credit the US customer's account.
sluggo
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Post by sluggo »

7432, why don't you call the CFTC again and tell them your newly discovered information? Perhaps they would be more willing to discuss at greater length, whether or not US citizens (or US residents) can trade LME metals and/or MATIF (now called "Euronext Paris") agriculturals, now that you are armed with additional facts.
AFJ Garner
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Post by AFJ Garner »

7432 wrote:so no answers on the MATIF contracts?
.
MTrade gives direct electronic access to many, many exchanges including Euronext Paris. It is glacially slow and shows no market depth. It’s strictly for the long term position trader.

Some of the more “exoticâ€
kianti
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Post by kianti »

AFJ Garner wrote:....execute your orders through LME Select - not the fixed time ring sessions.
LME rules are different from all the other futures markets and back-office could be a nigthmare. Let's take variation margin for instance: for futures is a profit/loss, for metals is a credit/debit. Not to mention the infamous 'discount value'.

See:
Metal Trading at the London Metals Exchange and
LCH.Clearnet Group - LME

best regards, as ever
7432
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Post by 7432 »

thanks AFJ Garner.
kianti's post is possibly the reason IB won't let customers acces LME, IB does not seem to like complications.
I reposted the 1996 CFTC letter to IB and ask them to have another look. in 1996 the CFTC posted a list of futures markets they approved of, all equity index contracts, but they never denied specific markets.
IB's position is that if a market is not approved by the CFTC they won't allow people in the US to trade it.
not sure why IB gives access to liffe commodities, maybe its the old liffe/cbot trading link.
ecritt
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Post by ecritt »

AFJ Garner wrote: Rightly or wrongly, I base my signals off the rolling 3 month prompt price available in CSI even though after entry, my position will be in a progressively shorter dated prompt date.
Intuitively it seems to me that one could create a synthetic that reflects the cumulative impact of real-life contango and/or backwadation. I do this by calculating the difference between the cash market today and the 3 month forward price, from 3 months ago. Dividing by the number of trading days that occur in 3 months yields my estimate point gain/loss for the day. Walk this forward for every day of history for the LME copper and you get something that looks a lot like a point based back adjusted copper futures contract that trades in the U.S.; and not so much like the quoted LME data you get out of CSI.

Eric C
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