What could go wrong with Treasury scalping? Or other types of scalping?

M

mgzheng

I have made good money the past 2 weeks in scalping US treasury. It reacted significantly to every economic number that came out that had to do with inflation and interest rates. I'm new to this, so to those who has tried it before, provided that I trade small (100 to 200 contracts which allows me to go in and out with just a click of a button using a market order without moving prices) and provided that I go in only when I see a significant reaction, can I keep doing this in future rate cut and rate hike cycles?

The reason I ask is that I read a posting from someone in this forum who has claimed to have 3 years of experience doing this and yet he said he ended up day trading stocks and he was asking people here for $10,000 of investment. So is there something that could really go wrong with this type of scapling that I am not aware of? What could that guy have done wrong?

Do the German 10 year bond and the major currencies react this predicatably to economic numbers? Do the emini light crude oil react predictably to inventory numbers on Wednesdays? Are there any scalping opportunities in those products?

Thanks very much ahead of time.
 
gosh ... if thats trading small ... ?


{ -I'm new to this, so to those who has tried it before, provided that I trade small (100 to 200 contracts - }

also ... are you new to scalping or new to trading

ZB + ZN + ZF ?

don't tell me you just started trading futures
and have no problem swinging the bat in 200 contract increments.
thats $6250 a tick in ZB

:eek:
 
Quote from mgzheng:

provided that I trade small (100 to 200 contracts which allows me to go in and out with just a click of a button using a market order without moving prices)
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What do you consider "trading large"?
 
I'm not all that new to trading futures. I've traded a few other things before, but "old school" style where I only traded 10 to 20 contracts, read charts and signals and kept my position for weeks. But after noticing that prices only moved at certain times, and most of the times, to economic numbers, I thought why not just time it and go all out when those numbers come out. Make a lot more faster that way, keep more profits by avoiding retracements. Besides, those electronic markets don't handle over night stops very well ( I got burned ), so they are basically for scalping/day-trading anyway.

100-200 is small during the busiest hours, 7:30am to 1pm EST. There are hundreds of contracts transacted per minute during those hours.

"Trading large" to me would be someone like... that Harris Brumfield guy who traded thousands of contracts day in and day out.

With an average of 10 tick moves per every "reaction" in the past 2 weeks, I only capture maybe 5 or 6 each time prices "react", because I wait for large volume, 2 tick move before getting in and a 2 tick retracement when getting out. Traded only during the busiest hours during the day. I could captured 6 ticks on average per "reaction", with $31.25 per tick, 100 contracts, I made about 18k profit each day when there was signicant news.
 
you ever trade in prop futures in office (?)

maybe oneday we will read about you
in one of those traders / futures / magazines

maybe you will become "Flipper II " ?

good luck ...

:)
 
When you say "react predictably", do you mean 'by the book', or just that you were in sync with how treasuries were moving in response to incoming data these past few weeks? I know currencies have a tendency to move "as expected" one report and then go opposite of textbook the next. But to me neither has ever been so cut and dry as you make it out to be (but then again, I'm not trading hundreds of contracts at a clip either, so fwiw :))
 
"Expectedly" means the way it should react according to books on economic numbers, ie. any surprises that was positive for the economy (better than forecasted employment numbers, better than forecasted consumer confidence, better than forecasted housing market etc) was negative for treasury.
 
How much margin did you put up to trade that kind of size in bonds?

Do you trade outright contracts (you only buy and sell one product at a time) or do you spread these?

Who clears your trades (which broker are you using)?

What times of day do you trade?

What is your daily loss limit?

What is your average hold time?

Thanks for answering all of these questions.
 
I've traded the size in Bonds mgzheng is describing (even bigger) and I'll give you the pitfalls of jamming into economic data.

Upon the # release if the data is "significant" there's no way to get filled at acceptable prices. Conversely, IF you DO get filled, you better watch out. Meaning the "story" behind the headline number is not as compelling as you thought.

A typical scenario. Let's say the market expects 180,000 new jobs. The first news blast is 105,000 jobs. Boom you get an uptick. But next comes hourly wage UP or average workweek (hours folks are working) UP, now bonds turn sellers HARD on a dime and you're holding the bag at higher prices. There's NO WAY that anyone can predict which way the markets bias/positioning/interpretation of this data is headed. You may get bullish data but a player who's long is waiting in the wings to unload into the buying that data will provide.
 
Quote from Pabst:

I've traded the size in Bonds mgzheng is describing (even bigger) and I'll give you the pitfalls of jamming into economic data.

Upon the # release if the data is "significant" there's no way to get filled at acceptable prices. Conversely, IF you DO get filled, you better watch out. Meaning the "story" behind the headline number is not as compelling as you thought.

A typical scenario. Let's say the market expects 180,000 new jobs. The first news blast is 105,000 jobs. Boom you get an uptick. But next comes hourly wage UP or average workweek (hours folks are working) UP, now bonds turn sellers HARD on a dime and you're holding the bag at higher prices. There's NO WAY that anyone can predict which way the markets bias/positioning/interpretation of this data is headed. You may get bullish data but a player who's long is waiting in the wings to unload into the buying that data will provide.
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That's a classic with trades placed at data releases.

It's a no win/ lose situation.
 
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