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>When I look at bond futures charts (US8M).. I get strange characters in
>the prices..
>
>Like this
>
>119^3
>
>
>are my settings correct?
>
>Thanks
>Troy Kelley
Here's your answer Troy - and a bit more...
The Bonds trade in thirty-seconds, so that instead of a decimal point
(obviously indicating tenths, hundredths) the symbol ^ indicates
thirty-seconds. Therefore, in your example the market would be trading at
119 and 3/32. Each tick of 1/32 is equal to very closely $32.
On most charts the numbers are expressed with two digits i.e. 119^03 or 119^
17 etc.
The excellent thing about trading the bonds is that when you see a market
price of say, 119^15 you will know that the bid/ask will be 119^14/119^16 at
most. Very often in average conditions or where the market has stalled or
paused, you will be able to get the price you see, without any slippage at
all.
Clearly, if the market is moving up and you are wanting to go long, you may
well have to pay an extra tick. However, given the normal conditions of
this market, the patient trader will know that given a minute or two the
market will nearly always come back 'to pick you up' at your price.
Unless you have a pre-set market order to get out and take profit or
reverse, if you want to get out, then always get out at market. If you are
going in because you spotted the market reversing and you give a limit
order, the chances are that, if you did not catch the market at that precise
time, it will come back and pick you up - but if you are getting out because
you are wrong, just do it at market. Furthermore, if you strategy is to
'stop and reverse' don't just put in an order for double the opposite way,
because the chances are you will get a bad fill on your new trade.
What you want to do is come out (because you were wrong and your stop hit)
and enter a fresh limit order. The chances are the market reversed, took
you out and then went on - only to come back to where your stop was or
perhaps even retrace a bit more. By waiting, you may pick up the reverse
trade at a price which at least equals your stop, if not covers it!
You will appreciate, I am talking day trading here, with good connection to
your broker, while you are closely watching your tick, 1" and 5" charts and
keenly obverving the price action in front of you... etc, etc, etc,...
!!!!! And, I am talking the T-Bonds from Chicago - nothing else!
If you look after the ticks, Troy, your broker will look after the
thirty-seconds. I have to say that I might well have expected the English
to stick with something like thirty-seconds, but you really would have
thought in modern America, it would have gone decimal. Over here (when
hopefully you guys have killed the Frankfurt/Khol-based EMU in the markets,
so that the dollar reigns supreme and sterling retains its back up position
in the league - in London) we like the concept of originality and long may
the T-Bonds in Chicago flourish
Actually, long may the bonds stay "open outcry", but that's another story!
Bondlingly
Bill Eykyn
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