|
PureBytes Links
Trading Reference Links
|
Had hoped the recent thread on bonds would have developed from the various
calls or guesses as to its future direction, to some discussion on day
trading. I appreciate that for position players it is necessary and no
doubt most consoling to have views aired on where the market is headed.
Such discussion for the day trader is at best academic and at worst biasing
a view on market direction, before the market shows it direction.
Take yesterday as a fresh example in people's mind. Those that called for
the market to go higher were wrong, those that called for the market to go
lower were right. I don't think anyone said it would go sideways.
Anyway, if the day trader was biased by the thoughts that the market was
going to go up, there would have been every chance that, if he didn't hold
on after the gap was closed, he would have fought the market to the trade
from the bounce at the key resistance at 118^13. His bias would have make
him hold when it came off underneath the previous day's high and the key
resistance at 118^29. He would have wanted to interperet a reversal as a
retracement. He was thinking about the market going higher... It would
have cost him. He would have been looking for the market to go higher,
not what it was actually doing.
The guy who believed the market was going lower would have been ultimately
in clover. However, while he would no doubt have joined the fun as the
market went through the pivot, for exactly the same reasons as the other
trader looking to buy the market, he would probably have held on far too
long to the up move against him. If he rejoined the move south from the
pivot, he may well have got disheartened with the prolonged,
hour-and-a-half, stall on ^16 while the market waited for the 'results' of
the coupon pass to hit the market. If he was still in, he cleaned up...
So let us see what the non-biased day trader would have had to look at as
the day started. For start, there was a gap that would close, but waiting
for the 7.30 Report would have stifled any move and the subsequent one
would have been too fast to have got a fill. However, the next half an
hour produced a wedge on the pivot, so a short aiming at yesterday's low
would have been a good target. In the event, the good resistance at ^13
would have put 5 or 6 ticks in the bag, with a good reversal trade to just
below the double strength of resistance at yesterday's high and ^29 -
putting another dozen ticks in the bag. The short trade from there -
looking for a double bottom as a target - ended at ^16 and the prolonged
stall. However, the little upthrust bar at 11.45 made the wedge with ^16
as its base, and this then put a really bearish look on the market.
You either went short in front of the coupon results and caught the 10 tick
trade south, or you stayed out just because of the coupon results and not
knowing which way the market would break from that news. That decision
depends on the rules by which you play... Anyway, there was no stall at
yesterday's low to get in, if you did not start before ^16. Nevertheless,
a second wedge formed (with a fill at ^04) and there was just time to get
out of the second leg of the big reversal bar with half a dozen ticks in
the locker.
The daily total for the unbiased day trader (not counting the windfall from
the coupon pass), using simple tools in the fashion well propounded by Ira
and the letters K.I.S.S, without an average or an indicator in sight, was
^20+ ticks. The biased trader would have had to fight against the bias and
may or may not have done as well... you can judge which is easier!
Certainly which is easier day after day unless your bias comes from a much
better source than the average on this list - which speaks for itself.
By no stretch of the imagination was it a great day on the bonds, but if
you can keep working away at $500-$1,000 a day that's not a bad income. It
is a lot of hard work day trading and if it isn't simple, I don't think it
can be done. Just put up an ADX and see where the line crosses the 30 and
look for the pull back to the Ex Av (the conventional wisdom) and then see
how much money or trouble you got - then try some other one!
So let me endorse Ira's very sensible approach and keep your trading really
simple and make sure that you are not biased by other people's ideas of
what is going to happen Today. Analyse the past, trade the present and the
future will look after itself - without you losing your shirt trying to
predict it or using someone else's prediction.
Bill Eykyn
www.t-bondtrader.com
|