Bond Trader 2006

[illiquid]

How do you guys trade 1000-lots and still post here? Are you insane or just don't care that much? Or both?

Anyways, a question for Lance: does your profit target, stop, and time-frame affect how large a position you take?

Say for example, you had anticipated the bigger selloff that materialized towards the end of the session. Knowing that, and still entering at the place you entered, would you have adjusted your stop/position size for an extended target? I'm guessing a trailing-stop (if you use one) would have to be much wider in going for larger moves, but what about your initial? Would it matter, given that you know you'd probably be in the trade a much longer period than for a scalp, that you would take a smaller position? Thanks in advance.

 

[johnpinochet]

Quote from illiquid:

How do you guys trade 1000-lots and still post here? Are you insane or just don't care that much? Or both?

Anyways, a question for Lance: does your profit target, stop, and time-frame affect how large a position you take?

Say for example, you had anticipated the bigger selloff that materialized towards the end of the session. Knowing that, and still entering at the place you entered, would you have adjusted your stop/position size for an extended target? I'm guessing a trailing-stop (if you use one) would have to be much wider in going for larger moves, but what about your initial? Would it matter, given that you know you'd probably be in the trade a much longer period than for a scalp, that you would take a smaller position? Thanks in advance.

There is a bit of a thrill in posting and nailing the market. See my posting during Friday's big report day last week. In trading nothing comes close to the feeling one gets when the market spikes down 20 ticks, comes up to a number you mentioned previously as a short entry on pullback, and then tanks from there.

I don't trade 1000 lots. One day, one day. My typical size is a standard 4 lot from my 2 lot when I started the journal. I'll also go up without hesitation to 6 lots, followed by 8. At that point it is usually a mix of 30 year and 10 year as I can't always get my entry in the 30 year, but usually can in the 10 year. I'll go up to a 10 lot, but only on occasion. My goal is to work to where my normal initial trade is 10 lots vs 4 lots. Also, if I'm unsure, I'll test the waters with a 1 to 2 lot trade simply to get in. Your psychology changes once you are in. You are better able to feel the market.

 

[Lance Carson]

Quote from illiquid:

How do you guys trade 1000-lots and still post here? Are you insane or just don't care that much? Or both?

Anyways, a question for Lance: does your profit target, stop, and time-frame affect how large a position you take?

Say for example, you had anticipated the bigger selloff that materialized towards the end of the session. Knowing that, and still entering at the place you entered, would you have adjusted your stop/position size for an extended target? I'm guessing a trailing-stop (if you use one) would have to be much wider in going for larger moves, but what about your initial? Would it matter, given that you know you'd probably be in the trade a much longer period than for a scalp, that you would take a smaller position? Thanks in advance.

illiquid,

When I enter a trade with multiple contracts I do it with an exit and a reversal strategy.This strategies very widely depending upon how fast the market is moving and other variables. In this trade I was so sure that it was going to go down that I did not placed a stop loss ( not recommended for a bigginner or novice trader)

I made the mistake of not paying attention to the Bearish formation that was forming and if would have notice it then my stop exit would have been the following:

On a six ticks move down ( 3 min chart) that means volume had increase and the chances of retracing back to my price have decrease. Then and ONLY then do I place a stop in front of my price ( in this case a BUY STOP). But since that never did happened then the only option that I had is to watch the price action ( no stops) and start counting the number of times the intraday support is tested and make a very calculated desision where to exit. This can be done only after you have many years of experience whatching the same market. Also been very nimble to reverse your position, a concentrated focus and with no distractions what so ever.( I was distracted by typing the trade on this forum, and I paid for that mistake by leaving a lot money on the table)

Do NOT try to trade more than one contract until you can acomplish six consecutive winning trades without a stop loss.

I hope that answers your question.I will not be typing any more trades here for a while unless they are this type of trades: Low risk, HIGH probability trades.

 

[johnpinochet]

Lance,

I found that giving my pre-market analysis, i.e. support and resistance, and maybe my most likely action at given points to be very helpful in preventing me from shooting myself in the foot.

That way in a fast moving market, I can concentrate on my trading and stop posting. In any event, do give an analysis as you are able throughout the day. No need to post everything. To be honest, posting after the fact is cool too. I post within seconds simply to hold myself accountable as it is my journal. Note that sometimes I take a break from the journal to concentrate on my trading.

To All,

In any event, I believe tomorrow will be a big day in bonds. Let's make a go of it with posting our analysis, comments and trades (if able to).

I'll post my price projection numbers, and my special spike numbers early tomorrow morning.

Here's my beginning prediction for tomorrow:

Friday 15 September 2006 will be a redemption day.

Per previous post, a redemption day covers over a multitude of sins (bad trades). So if you need some bond market redemption, tomorrow is the day to get it right.

 

[Lance Carson]

Quote from illiquid:

How do you guys trade 1000-lots and still post here? Are you insane or just don't care that much? Or both?



"You have to learn the rules of the game. And then you have to play better than anyone else". ~ Albert Einstein

 

[BlueHorseshoe]

Quote from johnpinochet:

BlueHorseshoe,

OK, I'll bite. A kiss below 107 000 followed by a close right on 107 000 is close enough for me. Good call.

Now, how did you do it?

I'm the Bluehorsehoe - what can I tell you?

 

[johnpinochet]

Quote from BlueHorseshoe:

I'm the Bluehorsehoe - what can I tell you?

Ah, Bluehorseshoe is being coy!

I believe we were roughly at 110 24 in the ZB when you posted that. To be honest my take was that we would end the day in that narrow rectangle, i.e. 110 26 - 110 31. In addition, at that point within the rectangle, it is pretty much a coin toss whether we spike up 10 ticks or spike down 10 ticks with no motivating factor. Granted going down in price ahead of the CPI on Friday, as major players unwind positions may have been an obvious thought, but I could easily see a rationale for bidding price up ahead of the report for a slam down.

I'm asking because at the point you made the prediction, I personally had no way of knowing based on what my systems were showing me at the time. Later in the day, per my previous posts, yes, I saw indication of prices going lower into the close.

 

[johnpinochet]

Quote from BlueHorseshoe:

Dec 10-yr closes under 107 today ... but you didn't hear it from me.

Yes, here it is from page 86. You posted this at 0859 CST. If you recall I took on a two lot long trade at 110 24 a few minutes before your post. I wish I had taken on a 10 lot there but that is another topic.

For those following along, pull up my chart on page 93, to see where this all took place.

Man, the more I look at that chart, the more I wish I had taken a 10 lot trade there, or even lower. We were good through 110 28 at a minimum, and maybe even 110 31, as it turned out. By the way, that price action there where I got in matches the chart I posted a while back marked by three circles.

The chart with circles can be found on page 75:

http://www.elitetrader.com/vb/showthread.php?s=&postid=1192164&highlight=circle#post1192164

 

[johnpinochet]

Pre-market commentary

15 September 2006

Today is the day we've been waiting for all week long. Here are the reports:

Consumer Price Index
0730 CST

NY Empire State Index
0730 CST

RBC Cash Index
0800 CST

Industrial Production
0815 CST

Consumer Sentiment
0845 CST

The most important report will be the CPI. The NY one is a wash as the CPI will dominate 0730 market action. The reports that come later might be market moving, but it is hard to say. I believe everyone is waiting for the CPI. In retrospect it looks like my short last week at 110 23 was the correct call after all. Obviously though, as a daytrader, you must take profit when and where you can get it. At a minimum you never let price get back to your entry and especially never let it go against you. Hence my profit stop as described earlier in the week.

Here is what I think will happen. I believe the report will be bad for bonds. I believe the market is going to tank. Can you tell what my bias is?

Here are the scenarios:

1) The report is bad for bonds.
Action: Sell pullbacks from the initial spike down and if possible, ride the initial spike down when we pause at a key number just before breaking through further to the downside.

2) The report is neutral for bonds.
Action: See above

3) The report is inconclusive.
Action: See above.

4) The report is positive for bonds.
Action: Buy pullbacks from the initial spike up and if possible, ride the initial spike up when we pause at a key number just before breaking through further to the upside. 111 08 to 111 12 is the initial target.

I think any of the above scenarios will lead to capturing a minimum of 10 ticks on 1 lot in the ZB.

Scenario 1 and 4 have legs and will probably last the whole day with a stair step style appearance.

Scenario 2 and 3 will probably be range bound, but depending on frustration level, they may have the same end result as scenario 1.

Price projection numbers and spike numbers to come later.

Tip of the week:

Watch the 10 year for signs of where the market might go. Last week the 10 year's price action was a leading indicator for me. So far this week it has done the same for me.

Here's how to use the tip. Generally speaking for me it only works while prices are consolidating in a rectangular range. If the 30 year is stuck in the middle of the range and the 10 year is at the upper end of the range knocking on the high, and then breaks through the high, go long the 30 year. This assumes that your indicators are lined up in that direction.

 

[BlueHorseshoe]

Quote from johnpinochet:

Ah, Bluehorseshoe is being coy!

I'm asking because at the point you made the prediction, I personally had no way of knowing based on what my systems were showing me at the time. Later in the day, per my previous posts, yes, I saw indication of prices going lower into the close.

In my (recent) experience the 10-yr exhibits strength heading into expiration of the near-month futures contract, and then leans toward weakness immediate after roll to next nearest contract. (Look at a chart of 10-yr over the past 2-3 years - this will be apparent enough to you.)

Moreover, given all the talk of 'record' long interest, it suggests to me that the near-term path of least resistance is most likely down.

That is a very generalized statement. But Sep is expiring shortly and the chart suggests we are due for a near-term bout of weakness. I'm leaning short over the next couple of weeks - of course my positions/inclinations change over time as the market speaks.

Blue will be looking to sell strength on Friday.

Good trading.