Behind the curtain

Most of us here are trading trough a retail broker using CFDs. Nowadays brokers, from most respected to bucket shop ones, offers CFD on almost everything. For the most, CFD are contract that are traded 24h/5 just like Forex.

So, it shouldn't be a surprise going to your platform and open a chart of SP500 CFD, it should surprise you tough the fact that you can buy/sell at any time just like Forex hours. SP500 is a weighted index of us stocks prices, us stock prices trade only a few hours a day... So for the other hours what prices is the CFD representing? How can be the CFD open for trading if the underlying is closed? Where does prices and fluctuation come from? Fluctuations can't come from the broker clients because then someone with enough money, not that much actually, could easily move the entire market at will when the underlying is closed: brokers are smart and wont allow that.

Having a chat with the support team of a respected broker you may learn that they use a model that takes into account other factors such as: fluctuations of other correlated instruments, economic news and so on. So basically, they create a market in order for you to trade when the underlying is closed... what a gentle souls are these brokers!

What if these models run also when the underlying is open? What if these models run also on Forex? Is the aim of the model to replicate accurately the underlying? How do you replicate a closed underlying? (replicating non-existent data??) Is the model doing your interests, interests of the broker or is it completely impartial? Do you need to beat the market, the model, or both? Maybe this one of the reasons why most people loose instead of being at BE (according to pseudo-normally distributed market theory)?

Ask yourself the following question then: how come E-mini SP Futures trade 23 hrs per day when underlying SP500 index trades only 6.5 hrs per day and closed the rest of the day?
When you answer that question, you'll answer all of your above questions.

Regards,
Blackeagle

The future price is the market's expected price of the underlying at a given date, so it's actually determined by market partecipants expectation + futures market is regulated so you are (almost) sure that every tick you see on the chart is the result of someone buying/selling.

Care to elaborate a bit more? Thank's.

the wholesale price isn't top secret, reuters or BB will do. compare it to your quote then arb the difference if you think there is any. But there won't be - that ship sailed long time ago.

the reason almost everyone fucks it up is primarily because everyone thinks they're being contrarian by doing the opposite of what they're told. Was the same when I started, is the same now, will be the same in 20 years. Maths hasn't changed, people haven't changed, and the basics of markets haven't changed either