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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?
Can you help answer these questions from other members on NexusFi?
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.
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.
