Bond Trader 2006

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4 Days in November (maybe 5)

This past week has been remarkably good to me. I've written in the past about "Redemption Days". I've never written about a "Redemption Week". It looks like this week will be one.

I'd like to ask you a question. Are you thinking of trading the bond futures or are you beginning to trade the bond futures? I wish someone had pointed out to me what I'm about to tell you much earlier in my journey.

Here's the deal. In my personal opinion, if you did not or could not make a killing these past four days this week in the 30 year and 10 year bond futures, then you need to seriously re-evaluate your trading strategy.

These past 4 days in November should be your gut check. If you can trade this past week then you know you are on the right track and your only concern is perservering through the inevitable chop days to get to the pristine days that always (and I mean always) return.

To give you an idea of what you could have done with a single contract, I can say with conviction, that each of the past four days, you should have made approximately 180 to 300 USD on the first trade of the day. The amount all depends on your entry and exit, but the numbers above are backed by my personal experience. Also, each of the last four days presented you with clear cut entries to buy/sell retracements after that first trade. I took advantage of 1 - 3 more trades after the first trade of the day.

Bottom line, this past single week in November has provided me with what I usually net in a month. You do the math and apply that to your situation.
 
Well done, I hope you get to keep your gains for the rest of the month.

Personally, I'd take a week off after posting something like that. :)
 
Quote from illiquid:

Well done, I hope you get to keep your gains for the rest of the month.

Personally, I'd take a week off after posting something like that. :)
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Thanks!

I agree BUT I'd like to see what the 0730 Housing starts report does to the market on Friday. In addition, after today's favorable 0730 report that resulted in a decline I'd say that Friday is going to be a very interesting day with a nice range to capture some ticks.
 
Trading the 0730 reports

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The below is completely different from what I've described in my "4 days in November" post. The average trader is better off not even reading the below post.
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Trading off of the 0730 CST reports worked remarkably well this week. I've cautioned in this journal that trading the reports is not for the faint of heart. It is incredibly risky and you are better off waiting for the retracement. However, this week, it all came together. You have to know the significance of the report. You have to know what the consenus is. You have to have this in front of you as well as a real time news service that will give you the number. You need to have the pivot numbers in front of you. You need to know key areas of price congestion. You need something similar to my price projection numbers (maybe Fib will do). Do you buy upon release or have orders in place prior to the report? I don't. My personal opinion is that method is ten times more dangerous than what I'm describing here. Seconds after the number is released you already know what the consensus was and now you know the real number. You also will know the direction of the spike. Now it is just a matter of picking your entry in the direction of the spike and at a favorable price.

Note that the above works remarkably well IF the report was of monthly significance, and the report is the first of significance in the week. An example of a later report in the week that was favorable to bonds but prices did not continue in the direction of the spike was Thursday. The interesting thing is that the "seconds" post 0730 report trade still worked. I got my six ticks and exited.
 
Pre-market ideas for Friday 17 November 2006

Bearish bias especially considering yesterday's 0730 report which was positive for bonds and bonds went the opposite way after an initial spike up.

Important numbers to watch:

113 06
112 30
112 26
112 15
111 26

Plan:

I'll be looking to short at the above key numbers as well as at any pivots. There are other numbers to pay attention to as well but I don't have them handy at the moment.

The ideal scenario would be to short starting at 112 15 or higher. I definitely will not short prior to the 0730 report, nor will I short spikes to the upside. If a spike to the upside occurs I'll have to stand aside and re-evaluate.

The money in the bank scenario would go something like this:

Prices wander between 112 08 and 112 26 all evening through the next morning.

Report comes out that is bad for bonds. Bonds plummet to 111 26, pause, come back up to kiss today's low (the kiss of death).

I'll close my eyes and sell up to twice my normal size at the point. See you on the way back down.

Good luck!
 
Your spike play method is exactly what I've been doing, and its served me well. but not today. :) Both spikes were generally up and the bias was unaffected.

In my short time trading the bond, I haven't seen this type of thing.

Do you perceive any possibility the selling is possibly done, considering fundamentals (ie cpi), and that a negative spike could actually be deceiving, resulting in a short cover profit taking rally?
 
Quote from scriabinop23:

Your spike play method is exactly what I've been doing, and its served me well. but not today. :) Both spikes were generally up and the bias was unaffected.

In my short time trading the bond, I haven't seen this type of thing.

Do you perceive any possibility the selling is possibly done, considering fundamentals (ie cpi), and that a negative spike could actually be deceiving, resulting in a short cover profit taking rally?
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Good to see a kindred spirit with the "report play" I described above. If one keeps in mind that the play is dangerous and limits the contract size, there really isn't much that can go wrong, other than taking a small loss. I say small loss because you are not buying the higher high or selling the lower low. You're carefully picking your entry. With a careful entry, the risk is small, maybe 4 ticks on the ZB.

By the way, I only traded one upside spike yesterday, i.e the single 0730 spike. I knew that 113 06 was an important number. Seconds after the report, I waited for prices to dip back to there, waited a little bit more got in at 113 03 and got out as prices tried to hit the 113 08 to 113 09 area. As I've stated, Thursday was really not a great day for such a trade, if you were expecting follow through. If you were happy to get 4 - 6 ticks, you were fine. Spike trades seconds after a report really aren't meant to be long term (15 min to 60 min) trades, unless prices are blowing through the previous high / low and you are simply adjusting your stop.

With that said, the absolute, money-in-the-bank trades occured later, at the following prices levels (times are approximate):

112 29/30 at 0850 CST

followed by

112 25/26 at 0950 CST

followed by

112 24 at 1050 CST

followed by

112 15 at 1220 CST

followed by

112 13 at 1340 CST

Absolutely no "V" day here. Honestly, I don't think I've seen so many consistently good setups in a single day for a long time, perhaps months.
 
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