I am trying to wrap my head around this question. It doesn't make sense how if my original counterparty my futures trade was paired with stopped himself out ten points ago, then who is going to pay me for the rest of the move I held onto?

Any ideas?

Spottrader 

I am trying to wrap my head around this question. It doesn't make sense how if my original counterparty my futures trade was paired with stopped himself out ten points ago, then who is going to pay me for the rest of the move I held onto? Any ideas?

When that other person was stopped out, he sold his contract to someone else, who know owns it. That new person lost the remainder of the money you gain.

For every contract out there, there is someone who is long that contract, and someone who is short.

Of course you see none of this, because that is all the backoffice accounting that goes on. You just have to worry about your position, and rest assured others will be paying your gains.

kevinkdog 

When that other person was stopped out, he sold his contract to someone else, who know owns it. That new person lost the remainder of the money you gain. For every contract out there, there is someone who is long that contract, and someone who is short. Of course you see none of this, because that is all the backoffice accounting that goes on. You just have to worry about your position, and rest assured others will be paying your gains.

Is it safe to say that often times a dealer will take the other side at any given point as well?

Spottrader 

Is it safe to say that often times a dealer will take the other side at any given point as well?

It is another trader, whether you call him a dealer, a market maker, an institution, a commercial, another speculator, - whatever. You don't know who it is, nor how long they have held it.

Is there a particular reason you are asking?

kevinkdog 

It is another trader, whether you call him a dealer, a market maker, an institution, a commercial, another speculator, - whatever. You don't know who it is, nor how long they have held it. Is there a particular reason you are asking?

Just intellectual curiosity. The more you know the better...most of the times.

What you're referring to is liquidity. There's always a counter party for any trade. But if there aren't many orders in an illiquid market, you may find that your price gets filled at a much worse level.