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When I read opinions, news, reports, I have discovered that it produces a
bias thinking which wars mentally against my MO. It only serves to produce
fear and doubt. So today I am cancelling all my little subscriptions to the
readers of the "tea leaves" and stay focused on the present market action.
By the way Bill, I didn't notice the part where you try to sell the "manual"
which many other seem to notice when you post. Thanks for dealing with day
trade psyche issues.
Denis Rochat
denis@xxxxxxxxxxx
-----Original Message-----
From: T-Bondtrader <t-bondtrader@xxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Thursday, May 27, 1999 8:39 AM
Subject: DAY: FUTR: T-Bonds
>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
>
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