Beginner's Question

A

ac200

Hi,

Ive been trying to find an answer to this for some time and would greatly apprectiate your help.

For some time I was paper trading 10 and 30 year T-bills on think or swim with the live feed.

I noticed that both these will bounce around a 3 tick price range for some time (30mins to an hour). I was buying and selling 1 tick moves within this bid ask spread. It worked very well.

My question is. How hard would it be, filling orders in this scenario. Does anyone have an idea as to whether or not that you could fill orders fast enough for this to be viable, or would you always be in the back of the que? (With ONE contract)

I understand the difficulties with the comission, takes and low risk reward ratio. I simply wish to know about how hard it would be filling limit orders in shorter time frames.

Your response is appreciated thank you guys.
 
Hard to know... The matching algorithm for the trsy futures is now 20% FIFO/80% pro-rata, last I saw. Which means that, with a one lot, you might actually get filled as a result of what they call pro-rata leveling.

I am not really an expert, so I would hesitate to give you a more specific answer.
 
It seems like the only way i'd know is to try it.

Although as a beginner this is probably a bad idea.

I suppose i'll just stick to stocks for now if anything.
The main reason i was interested in futures was because i can do it at night and work during the day but i guess thats not realistic for a beginner.

: /
 
Quote from ac200:

Hi,

Ive been trying to find an answer to this for some time and would greatly apprectiate your help.

For some time I was paper trading 10 and 30 year T-bills on think or swim with the live feed.

I noticed that both these will bounce around a 3 tick price range for some time (30mins to an hour). I was buying and selling 1 tick moves within this bid ask spread. It worked very well.

My question is. How hard would it be, filling orders in this scenario. Does anyone have an idea as to whether or not that you could fill orders fast enough for this to be viable, or would you always be in the back of the que? (With ONE contract)

I understand the difficulties with the comission, takes and low risk reward ratio. I simply wish to know about how hard it would be filling limit orders in shorter time frames.

Your response is appreciated thank you guys.
More...

Hi friend.

Please take my advice, it will save you a lot of time.

I regularly spread the U.S. Tnotes and trade them outright too. Taking 1-tick on a winner is asking for trouble. It will blow you out. You have no edge at that level. The only edge someone has with 1-tick profit targets, when it's a live market, is the market maker.

> They have instant access and algorithmic trading, and their trading models are happy to scratch 90% of the time, win 8% of the time and take a loser 2% of the time. They are instant, they are fast, they are drop kick noise creators.

> How fast you get filled obviously depends on the volume/volatility of the session. However, if you were trading a little 3-tick range in the T-notes then trust me, it was SLOW. You cannot just continuously take 1-tick and re-enter. You will eventually win 2 times, but then it will rush 2 or 3 against you in the live market and you're forced to take a 1-tick loser or 2-tick loser. So you make squat all, after brokerage costs.

> As a very basic profit target, you should aim for minimum 2-3 T-note ticks. Because that is about half a basis point in yield. That's enough room to win over the long run, if you think you're right about the idea.

> Taking 5-ticks is also great, that's a basis point move, but it's pretty hard to just let it ride 5 in a straight line without trading back and making you cover.

> So as a summary, the T-notes have lots of distortion on the micro-level (bid/ask spread) and it's essentially random for us slow humans.

Of all the successful T-note traders I have met, in todays game of trading, the guys who took 1 tick all the time have blown out or have a negative account right now. Guys who take 2-3 ticks or more.... well they're still in business with me. So take from that what you like.
 
Hi Sommi,

Thank you for taking the time to respond i really appreciate that.

As to your advice/response it definitely makes sense and that is what i figured. I will take your advice. :)
 
its very good instruments to begin from. they are not so volatate and you could manage your risk. but the instruments are very liquid so you could use the same tehnique for 1 and 20 lots. but you should definatelly should look for platforms which would be frendly to futures..
 
Don't know who said 10 and 30 yr futures are pro-rata but they are not (they are FIFO). It probably won't be profitable unless you have very good execution, which is going to have a lot to do with your trading platform. Trading unhedged one lots from think or swim is probably going to get you ran over. Without knowing much about you, I would not suggest that strategy.
 
s0mmi has it exactly right. Also I should caution you that the TOS paper trade platform has a very unrealistic fill algorithm. If buying it will fill you when prices reaches your bid and on selling it will fill when price reaches your offer, where in practice you usually won't get filled until price moves one tick through your bid or offer. This is dependent on where your resting orders are in the order queue. Getting filled regularly at your bid or offer means you don't have to pay the spread, and it's very easy to scalp and make money under those circumstances. That's what market makers do. But, you as a retail trader will most of the time have to pay the spread. To compensate, when using the TOS paper trade platform, subtract 2 ticks profit from each winning trade and add two ticks additional loss to each losing trade.
 
so when you are saying a tick, since 10s trade on half-tick, you are still referring to the bond tick right? so 1t=31.25 and 1/2t=15.625...


Quote from s0mmi:
Hi friend.

Please take my advice, it will save you a lot of time.

> As a very basic profit target, you should aim for minimum 2-3 T-note ticks. Because that is about half a basis point in yield. That's enough room to win over the long run, if you think you're right about the idea.

> Taking 5-ticks is also great, that's a basis point move, but it's pretty hard to just let it ride 5 in a straight line without trading back and making you cover.

> So as a summary, the T-notes have lots of distortion on the micro-level (bid/ask spread) and it's essentially random for us slow humans.

Of all the successful T-note traders I have met, in todays game of trading, the guys who took 1 tick all the time have blown out or have a negative account right now. Guys who take 2-3 ticks or more.... well they're still in business with me. So take from that what you like.
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