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charles1

Ultra T Bod

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this new instrument has been trading since Jan.12th, 2010 and I am not sure how to trade it. I am trading it in my paper account and put over a million in my account in just two positions. I don't get it becausse is it that easy. Am I missing something, please someone help me understand this, because I would like to step in with my real account. Thanks TL

 

Charles1

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From the perspective of a short term futures trader there is no difference from the classic 30 yr bond contract except the current liquidity is terrible. Same tick size and same contract months and hours. For longer term participants there is a difference in the deliverable for the remaining terms to maturity.

 

As far as the windfall in your paper account I have no clue but this contract is too illiquid to trade live. Coupled with its richness (large tick size) a possible disaster waiting to happen, imo.

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2 trades is not really statistically significant. Come back when you have done 30 (or preferably more). If you are confident in your method sure, go for it. If your approach dosen't have a positive expectancy you are actually better off putting it all on one trade and quitting win or loose. If you have a positive expectancy then little and often and let the edge work it's magic.

 

What sort of leverage are you using? What;s your risk of ruin?

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thank you for the input and I guess for the most part I think I'm just surprised at how much capital was made on the paper account. Now for the comment on contract being illiquid. Since the first trading day the price action goes from about 124.00 to about 63.00 or so, a straight drop down and then a straight shoot up back to around 124.00 roughly.As for the leverage its 100:1 as for the ruin that would depend on the stop. But the risk is about 100 ticks on one contract. Tick size is 31.25 a tick. I've definately made more then 30 trades, just only made two trades on the ultra t bond so far. Somewhat of a newbie if not obvious just looking to see if anyone else is watching this new ultra t bond and thinking of trading it and if so wanna start a thread on it. If I open one contract and set my stop say 100 ticks and it keeps behaving the way it has one contract is worth about 153K.......?

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thank you for the input and I guess for the most part I think I'm just surprised at how much capital was made on the paper account. Now for the comment on contract being illiquid. Since the first trading day the price action goes from about 124.00 to about 63.00 or so, a straight drop down and then a straight shoot up back to around 124.00 roughly.As for the leverage its 100:1 as for the ruin that would depend on the stop. But the risk is about 100 ticks on one contract. Tick size is 31.25 a tick. I've definately made more then 30 trades, just only made two trades on the ultra t bond so far. Somewhat of a newbie if not obvious just looking to see if anyone else is watching this new ultra t bond and thinking of trading it and if so wanna start a thread on it. If I open one contract and set my stop say 100 ticks and it keeps behaving the way it has one contract is worth about 153K.......?

 

So how much capital are you gonna need to trade it? I should have a very careful look at your money management. Even with 75% winners you will have runs of losses. Will you be OK with a 15k draw down? Just two losses in a row would be 6250 (with 100tick stop) which is fine if you are properly capitalised and have the cojones (OK emotional strength if you like) to step right back up to the plate. You can find out how to calculate risk of ruin for different R:R and %winners here TradersCALM - risk of ruin menu

 

Just be very careful.'Big' contracts that are thin and volatile intraday can crush you (I speak from experience) :) the damage to your confidence to execute can be greater than any financial loss.

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The cojones I have, The capital I have. I just don't know enough about the instrument. TOS offers no news on it. The CME Group has 3 pubs on it I downloaded. I'm testing it on my paper account. In just 5 trades I went from $117k to $2.6Mil opening between 10-20 contracts a position. I can handle 10 contracts live but only willing to risk one (1) and/or maybe two (2). The thinness won't let me go beyond 20 contracts. Looking for someone to trade it with me? Thank you, the pub was eye opening. I appreciate your time too

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I guess with only a month trading it is any ones guess at the end of the day . Seems smart to try the water with minimal size. (Is it fungible with any of the other notes? I guess even if not it will be highly correlated. If it was me, that would make me feel more comfortable about it. Let us know whet you decide.

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To me this is bizarre - why would anyone trade this? Why not just trade the 30year. Or for better liquidity the 10year. In my humble opinion this is just a new product designed to reduce the capital of the retail trader. In other words it is not designed for the retail trader.

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