babycakes
One of the whores I'm pumping is indeed the Aussie Bank Bills but not in the way you imagine. I am not a full time STIR trader. Usually you'll find the STIR traders to be full-time in reading price action and holding queue positions.
Also, it's rare to find a full-time STIR trader who pumps someone from every country. Usually they will specialize, either in Australia or America or Europe or Britain or Canada. It depends on the time-zone.
From what I hear, the Sterling is usually the best because of the hours though (and the UK is light and tight compared to Euribor of course).
If you are going to trade you have to follow the trend with whats moving... there is no inflation coming back as of yet.
If you asked me what I would do if I walked into an Australia-focused trading situation then I would do the following...
For Australia, your war station should be comprised of:
1. Short End - Bills (HBS?3, HBS?4, HBS?5, HBS?6 etc.)
The first 4 HBS = 1st year
The second 4 HBS = 2nd year
The 3-month calendars will obviously never move but you should probably do something like this;
Bring up the 4th and 5th bill together on a chart to see what they've been doing over time;
Here we go;
You can see massive strength in Bills
2. Middle-End - 3yr Bond (HTS)
Bring up two charts for the 3yrs. One should be Bills v 3yrs, the other should be 3yrs v 10yrs Curve;
Bills 3yrs Spread
3yr v 10yr Curve
3. Long-End - 10yr Bond (HXS)
Part of your 10-yr station will have the Aussie Curve already (from the middle section) but then you probably want to add a spread with the U.S. Tnotes because Australia's cash session is during Asia and then the over-night begins to take a beating in the ass from Bund + Tnote
Trading Strategy
The blueprint for the war station ends here because Australia is pretty small and only has 2 bonds. This is a positive thing not a negative, because we are a tiny piece of sh*t floating in the ocean, we are very susceptible to retracements from overseas influences. This translates to auto-fade territory most of the time.
Note: Most charts I've put at 30-minute, you should start to hone in on 5-minute charts if you want to scalp around or play around with a suitable time frame.
The time frame does not matter too much but all you need to see is the picture across the curve.
Using a set-up like this, if you are taking order flow from the Bills or 3yrs or 10yrs, at least you can see where it is relative to everything else.
I've literally p*ssed away a lot of fundamental edge in this post but it doesn't matter because if you want to work hard at this, you can. You need to go back in time and back-test your little ideas. For example you may want to see how sitting a certain distance away (0.5 bp, 1.0 bp, 2.0 bp etc.) can change your profitability over time based on leads from other parts of the curve.
If you are going to come out ahead of the game or with an STD, it will all depend on whether or not you actually went through the execution and the timing of trades that you're comfortable with. You have to consider factors like profit taking (enormous traders still take 1 bp in trades they are not sick c*nts).. and the timing perhaps of trade (at what point do you give up)... and whether or not Tier 1 news is coming out (Aussie GDP, Aussie CPI, U.S. NFP etc.)...
Once again I would stress to you, like I have said in many other posts, the juice is in high probability, low frequency trades. My 2 traders so far have been extremely successful with this mentality because I tell them only spastics think they have to go in with their fingers on the trigger every day. Volatility is telling you the exact opposite.
I hope you enjoyed this post
