Taking and Giving

11 April 2006

Trading is an art, and not a science although maths and quants dominate the market eventually it comes down to where will you really do the business, and at that point sometimes a bit of coaxing from the seller or buyer can save some serious ticks.

Trading is all about taking and giving. Traders will take the offer and give the bid. Often markets are perhaps not as transparent as players think they are looking at screens they can see a sea of pink and feel satisfied that numbers are being shown across the curve, further detail can show that contract bid offer spreads are very wide. With sometimes the liquid product such as Winter 06 £2 apart.

If you are a buyer and the market has dropped to range that you feel happy to trade at it is often difficult to know when to take the offer or show a bid and wait to be given. It is always difficult in any negotiation to start with a number and then step back from it and traders are no different their opening bids and offers can equally tentative. In these circumstances if the market is £66 at £68 it is sometime wise to show a significantly better bid for a morning perhaps at £67 you would make it clear to the broker that this is a one show for twenty minutes bo movement but you would be happy to show the number anyway. If it does not trade be prepared to move it off the screen after an hour and perhaps look to put in early in the morning. When traders look at last trades the previous night they can see a lone bid looking reasonably high and give it early in the morning, often setting the tone for the rest of the day. No trading strategy is guaranteed success but these are all ways in which sellers and buyers can tempt each other to get closer to their numbers.


Electricity  Forward Curve 

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