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Stewart:
Thanks for this look at one of the methods you use when trading for yourself and
your clients. When you sent me the file, my first reaction was indeed 'I've seen
other people do something similar to this.' In fact, in less hectic markets when
bonds are in a well-established trend, I normally look for a pullback to
establish a position. If I miss that opportunity, I'll buy part of a unit on the
move taking out the 'second drive' and if a pullback comes, I'll be adding more
of the unit above the area where I would establish my stoploss on the whole
position. Again, if I miss buying the pullback, I'll buy the 'third drive' to
get the balance of my normal trading size on board.
I admit I hadn't been using an oscillator to filter the trades, but I'll give it
a try.
Again, great post. And thanks for sharing.
Best,
Tim Morge
Stewart Taylor wrote:
>
> This morning the bonds are showing another Three Drive formation. Look at
> a five minute day-only bond chart. Note that at 9:15 the bonds put in a
> high @ 128.13, then 128.22, then 128.24 at 11:15.
>
> Their is a clear cut trend line (recently broken) and the detrend study is
> showing a second divergence. This trade isn't as clear cut as the previous
> examples (particularly with the equities background that we are trading
> against this morning) but the risk to stop is very low.
>
> Note that the underside of the broken trend line should act as resistance.
>
> Note that there is potentially climax volume just to the left (earlier this
> morning) and that the market has already moved strongly higher and in fact
> a gain of more than a point on the day is a very rare occurrence.
>
> Additiaonly, the hourly and the fifteen minute charts are very overbought.
>
> Is the trade doable, yes. Will it work? Hell if I know, but it's the kind
> of setup that I almost always take....even when like today I have a great
> deal of doubt. Frankly, at this point I see the bonds as being more an
> equity bet than a bond bet. I wouldn't stick with the trade very long and
> would be quick to exit if the equities began to weakness very much.
>
> Would I do it in a big way.... no, not today. It's a scalp at this point.
> Iwould put a stop three to four ticks above the high.
>
> Anyway, just trying to stimulate discussion.
>
> Stewart Taylor
> Taylor Fixed Income Outlook
> Voice: 501-219-9774
> Fax: 501-228-0963
> E-Mail: staylor@xxxxxxx
> Web Site: http://www.cei.net/~staylor/
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