Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Soultrader

Frustrating Bond Trade

Recommended Posts

Here's a trade I did today in the 30 year bonds with a horrible execution.

 

2 losing trades.

 

attachment.php?attachmentid=1432&stc=1&d=1178815172

 

The first arrow shows my short entry. Price rallies at the open and is rejected 1 tick away from VAL. The reason for my short was because bonds opened below value.

 

Entry: The price rejection at 111 18/32 was pretty quick and I watched prices auction a for the one 5 minute bar. My tape reading skills in the bonds is still unexperienced compared to the YM and I hesitated and went short with a market order which got me filled at 111 13/32. The moment I was filled, I knew I had made a horrible entry. Normally, I would use a 3 tick stop. But because of my horrible entry I decided to use a 6 tick stop right above the HOD. About half hour later I was stopped out by 1 tick. Approx. 200 contracts trade on a 3000 thick contract ask. I was one of the 200 lots.

 

I then reshorted at the blue arrow labeled #1. I felt better about the entry but had my eyes glued on tape. About a half hour later, I felt prices holding firmly at 111 15/32. I decided to cover for a scratch trade. Shortly after, bonds declined for approx 4 ticks past my entry.

 

A couple of things come to mind. My hesitation on the first trade. My loss on my first trade affected my second trade.

 

I would like to receive some feedbacks. Any criticism is welcome. Thanks

losingtrademay10.thumb.gif.bc1c2bdca9e1b08e6ca256ab6f74a379.gif

Share this post


Link to post
Share on other sites

On the daily chart it looks like the start of an up trend so weren't you breaching your own trading rules by taking a short? The first hourly candle was bullish too and on high volume so it looks like you paid the price for ignoring your own rules.

 

I personally concentrate on the fundamentals for trading bonds and treasuries, especially on days like today with the weak trade number and expected weak retail sales number tomorrow being bullish for bonds. I didn't trade ZN today but probably will after tomorrow's retail sales number.

Share this post


Link to post
Share on other sites

The daily chart looked mixed to me. So I went down to the 65 minute. The chart below shows a 2 day downtrend in the bonds. Hence the reason for a short.

 

attachment.php?attachmentid=1433&stc=1&d=1178817436

 

Yes, I definitely need to be more aware of the fundamentals with the bonds and how they react to numbers. In hindsight the volume spikes of the past sessions shows good support compared to todays volume at the lows.

65minutebonds.thumb.gif.34cd759aaf50b6d8a227d3cd1d11c3d5.gif

Share this post


Link to post
Share on other sites

Maybe tape reading in the bonds isnt as useful as the dow. There are a lot of curve trades and locals scratching contracts that they got from the pit in the bonds. So, hitting the bid might just be the other leg of a yield curve trade.

 

U might want to listen to the bonds squawk and get a feel for what goldman is doing in the pit.

Share this post


Link to post
Share on other sites

What you say about the yield curve is exactly what I was thinking. Unlike the Dow there's no speculative retail participation in the bonds. There's yield curve traders, arbitrageurs, hedgers and long term investors to name a few so how could you make sense of all that from the tape? You have my admiration if you can.

 

I don't agree with what you say about the bond squawk because most of the volume is electronic.

Share this post


Link to post
Share on other sites
What you say about the yield curve is exactly what I was thinking. Unlike the Dow there's no speculative retail participation in the bonds. There's yield curve traders, arbitrageurs, hedgers and long term investors to name a few so how could you make sense of all that from the tape? You have my admiration if you can.

 

I don't agree with what you say about the bond squawk because most of the volume is electronic.

 

 

 

Bonds squawk are mostly on options and yield curve. Not much outright quotes.

At least u know PIMCO and goldman are huge sellers of puts or buyers of calls, then u can develop a bias. Better than watching the screen's time & sales trying to figure out what the uptick and dntick means.

Share this post


Link to post
Share on other sites

I've never used a bond squawk. I've only ever used the tradersaudio S&P Squawk which I found worse than useless. Do you have any recommendations for a bond squawk and how to use it? I'm not concerned with catching every tick, just the bigger moves.

Share this post


Link to post
Share on other sites
I've never used a bond squawk. I've only ever used the tradersaudio S&P Squawk which I found worse than useless. Do you have any recommendations for a bond squawk and how to use it? I'm not concerned with catching every tick, just the bigger moves.

 

 

 

Ben at tradersaudio has a bonds squawk. Sign up for a trial and see how it works for u.

 

They used to post all the big options trades at the end of day. Not anymore now. Here is an attachment of the whole 2005 big options trade. U can see for urself whether it has any predictability. But from what i remember, i heard a lot of big boys bidding when we bottom on June 06.

 

But anyway, i dont trade it anymore. I have found little success trading it. The crowd is too professional and not a good day trading market. This market almost exclusively move on reports and has limited range during non-report hours relative to the minimum tick size. I think it is good to position trade.

Share this post


Link to post
Share on other sites
Guest cooter

James,

 

If you can trade the ES on a purely technical level, without the crutch of market internals, then you can trade the Ags....

 

Just my two and 3/4 cents worth...

Share this post


Link to post
Share on other sites
James, have you started trading grains yet? I'm watching bonds, but makes me want to zzzzzz...

 

Grains are really interesting contracts (sorry bit off topic). From a fundamental perspective I like corn contracts because of the larger use of corn production in ethenol fuel.

 

Being an Aussie, I'm looking at metals hmmmmm Uranium!

Share this post


Link to post
Share on other sites

James - my only feedback on that trade was that your short entry was done on a hammer type line. To me, that's either a bullish entry or a reason to not go short. I personally don't care of the bonds as your 5 min chart showed very, very little movement in my opinion. I know the ticks are worth more, but I need volatility and the bonds simply do not have that many days. Perhaps a volume based chart would work better in bonds, just a suggestion.

 

One suggestion James - instead of jumping from the indexes, to bonds, to grains, to metals to the next greatest futures contract, why not stick with one and become a specialist on that one market? Perhaps this is another discussion in and of itself, but one thing I see here is the jumping from one market to the next. Trust me when I say this - changing markets is not the problem and/or solution. I've been there and done that, so please let my mistakes and thousands of dollars save you some time. Become a specialist in one market and then exploit the hell out of that market.

 

I liken it to becoming a highly paid brain surgeon or a general practitioner. You can be a jack of all trades and be ok at those, or be really, really good at one thing. That's how I operated my stockbroker business and it's how I operate my trading business. I learned years ago that you will never be really good at a whole bunch of things, so I suggest becoming an expert in one.

Share this post


Link to post
Share on other sites
James - my only feedback on that trade was that your short entry was done on a hammer type line. To me, that's either a bullish entry or a reason to not go short. I personally don't care of the bonds as your 5 min chart showed very, very little movement in my opinion. I know the ticks are worth more, but I need volatility and the bonds simply do not have that many days. Perhaps a volume based chart would work better in bonds, just a suggestion.

 

One suggestion James - instead of jumping from the indexes, to bonds, to grains, to metals to the next greatest futures contract, why not stick with one and become a specialist on that one market? Perhaps this is another discussion in and of itself, but one thing I see here is the jumping from one market to the next. Trust me when I say this - changing markets is not the problem and/or solution. I've been there and done that, so please let my mistakes and thousands of dollars save you some time. Become a specialist in one market and then exploit the hell out of that market.

 

I liken it to becoming a highly paid brain surgeon or a general practitioner. You can be a jack of all trades and be ok at those, or be really, really good at one thing. That's how I operated my stockbroker business and it's how I operate my trading business. I learned years ago that you will never be really good at a whole bunch of things, so I suggest becoming an expert in one.

 

Thank you Brownsfan. Some very good advice. I currently trade the YM and Bonds only. I do agree with specialization but have been interested in picking up a new contract besides the YM, hence the ZB.

 

I took 6 ticks on the bonds this morning. Im definitely going to be trading the YM always but will slowly start learning the bonds.

 

Thanks :)

Share this post


Link to post
Share on other sites

I don't agree with the specialisation idea. It's probably wise if you're just scalping but for position or swing trading or even day trading when you only make one or two trades a day per contract, diversification is key. If you have good set ups in different contracts and you have say 5 open positions at any one time, it's highly likely that every day will be a profitable day. I trade YM, ZN, GBP/USD and QM but I'm also looking at trading other contracts. I'm planning to add a new market one at a time and once I'm comfortable trading it, move on to the next. Gilts, Eurobunds, FTSE, Stoxx, sugar and corn are on my "to do" list. I've looked at gold and the Asian stock indices and didn't find them to my liking. I'm not saying this is necessarily the best way to trade, just that scalping is not necessarily the best way to trade either. To me the issue isn't whether a contract is fast or exciting but whether I can profit from it.

Share this post


Link to post
Share on other sites

notouch - I would be concerned with information overload with many different markets in front of you. It seems to me that James and a few others here jump from one ship to the next before conquering their first endeavor. And I understand why, I used to do that myself. I think trading multiple markets is a great idea if you can do it, but you first have to be able to trade ONE profitably. If you can't trade the YM, odds are you won't be able to trade the QM, EC, DAX, etc. etc. Yes, there are exceptions based on the market being traded, but I doubt too many of us here have finely tuned trading methodologies based on each individual market. Most probably have their way of trading and then apply it to that market. Assuming that is true, mastering one market before venturing into another is something to consider.

 

I would also add that if you can master an index for example, you can easily just trade that with large size vs. trying to get trades on in 10 different markets each day. I've been content lately with just trading the ES and to be honest, it's much less stressful. I have no liquidity issues and have one chart open. That's kinda nice actually. ;)

Share this post


Link to post
Share on other sites

I agree you need to master one before adding another but you have to appreciate that swing and position trading is very different from scalping. With swing trading you're making one trade and leaving it for a month. Is sitting there staring at the same chart a good use of your time? I definitely agree that for scalpers who need to be watching the same chart from open to close, it makes more sense to increase the number of contracts you trade. For longer term trading though it makes sense to diversify instead of putting all your eggs in one basket.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • DXCM Dexcom stock, great day off the 69.73 support area, from Stocks to Watch at https://stockconsultant.com/?DXCM
    • Depressions aren't real either... ??
    • Dear B4 #42, I heard you can't get out of bed and decided you were going celibate and shaved your head and “reconsidered” having children.  If it took Trump getting elected to get you to stop fkn every Dum, Harry, and Dick you meet, we’ll take it.  thx Sincerely just sayin’ zdo PS To all the other girls I loved B4 - https://www.youtube.com/watch?v=rVq0ONrSH-Q 😚
    • MDB MongoDB stock watch for a range breakout at https://stockconsultant.com/?MDB
    • Date: 12th November 2024. Market Buzz: Trump Trade Impact! “Trump trade” has boosted the US Dollar and US stocks, but Trump’s policies may have less favorable effects on global assets. Trump’s plan to raise tariffs is expected to negatively impact economies worldwide, especially exporters like China. Asia & European Sessions:   Bitcoin Surge! Bitcoin broke $90K, driven by Trump trade once again. Bitcoin is up roughly 110% in 2024, helped by robust demand for dedicated US ETFs, interest rate cuts by the Federal Reserve and Trump’s cryptofriendly agenda. Crypto market capitalization has exceeded its pandemic-era peak, reaching $3.1 trillion. Traders are betting on Bitcoin reaching $100,000 by year-end, according to data from the Deribit exchange. Open interest — or outstanding contracts — for CME Group Inc. futures for Bitcoin and second-ranked Ether (ETHUSD) scaled records on Monday, a sign of growing engagement by US institutional investors. Asian shares dropped, alongside European and US equity futures, as traders evaluated the implications of President-elect Donald Trump’s policy agenda and potential cabinet choices. The MSCI Asia Pacific Index fell for a third consecutive day, driven by rising Treasury yields amid concerns that Trump’s proposed tax cuts could increase inflation. There are also reports that Trump is considering two individuals for prominent roles in his administration with track records of criticizing China. DAX and FTSE100 are down -1.1% and -0.5% respectively, after a pickup in German HICP inflation and higher than expected UK wage growth dampened easing expectations. Investors await the US CPI report for insights into the Fed’s easing path, as Trump’s inflationary policies may lead to fewer rate cuts. Financial Markets Performance:   The USDIndex continues to rise and is currently at 105.75. It hit a 1-year high. EURUSD drifts to 1.0620 and GBPUSD is in a sell off, currently at 1.2800. Oil prices fell after their biggest 2-week decline, amid a weak demand outlook from China, a stronger US Dollar, and concerns over a potential oversupply. Crude oil has traded within a narrow range since mid-last month, influenced by Middle East tensions, the US election, and OPEC+ output decisions. Gold remains under pressure and is currently at just $2604.36 per ounce. It hit a one-month low, down 5% since Trump’s election victory, as a strong dollar and US equity rotation pressured the metal. Gold’s decline was also technical, breaking below the 50-day moving average, causing funds to cover long positions. Despite recent drops, gold remains up 25% for the year, supported by central bank purchases and geopolitical risks. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.