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I don't trade bonds but am curious about some
things. Are day traders still trading the 30 year? What is the
preferance these days? Also, are there any street savy truisms regarding
time of day, day of week kinds of things that would get a novice bond trader in
trouble? For an off floor bond trader what are other significant things to
monitor besides economic reports? If an experienced snp trader started
trading bonds what should he add to his arsenal of knowledge and
tools?
thanks for candid answers,
bobr
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
topos8
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="">realtraders@xxxxxxxxxxxxxxx
Sent: Monday, July 21, 2003 10:54
AM
Subject: [RT] Fwd: Re: Bond update
--- In <A
href="">gannsghost@xxxxxxxxxxxxxxx,
"topos8" <topos8@x...>
wrote:--- In <A
href="">gannsghost@xxxxxxxxxxxxxxx, David
Blaschke <dblas@x...> wrote:>
Carl,> > I don't trade bonds, but I have found, like you
just> did, that points/targets are simply events and not>
support or resistance.i.e. a significant event will> happen at
114. It could be continuation, reversal or> the start of a
trading range but I don't know which. David:I have found
no such thing. I trade bonds and S&P's and every one of my trades
starts by fading the market when it reaches support or resistance.
Of course, if I am stepping in front of a strong trend I might wait a
while (5 minutes to an hour or...) to see if anyone else has the courage
of my convictions. If they do the market will trade sideways without
breaking support/resistance by much and this will give me reason to
take a position. If I am fading a reaction against a strong trend
I can be more aggressive. One of my favorite tricks is to fade a breakout
from a small trading range on the 5 minute charts if there is
support/resistance just past the breakout level. Another trick is to
wait for a wide range, 5 minute bar indicating a buying/selling climax
and a possible end to the reaction. If the extreme of the bar is on
support/resistance I take a postion at the close of the bar.The whole
point to making trades at support/resistance is to get free exposure to
the market for some limited amount of time. This means that for a limited
time any loss is likely to be minimal and the profit potential of getting
things right is many times the risk.In the case of the bonds at 114,
the fact is that I took no position when the market first hit that level
on July 15 for two reasons. First, the downtrend was a very strong one and
there was absolutely no hesitation when the 114 level was hit.
Second, the 114 level itself was intermediate term support. Typically the
market will not stop exactly at such a level. This would make things too
easy and obvious. Instead, the market typically stops at short term
support or resistance a bit ahead or a bit past the intermediate term
level.In the case of the bonds at 114 the corresponding short term
level was 113-08. I did not take a position the first time 113-08 was hit
but did so the second time. The bonds continued down to 113-04 then
rallied to 113-16. I had to get out when the market broke below 113-00
because this itself was a downside breakout from a 113-04 to 113-18
trading range which had lasted about 90 minutes. This range formed right
at short term support but the downside breakout meant that there were not
enough buyers there to halt the downtrend. To assert that there is no
such thing as support or resistance is deny the existence of the very
phenomenon that allows markets to work. There are lots of traders who,
like me, are looking for a change to buy when the market is relatively low
and to sell when it is relatively high. Each is looking for a price that
will give him or her the confidence to step in front of a trend and fade
it. It is the activities of these sorts of traders that keep markets
orderly most of the time and provide the liquidity needed to accomodate
big orders. There are many ways to calculate such prices. There
are a few that work reliably. But nothing works with 100% certainty.
All you can hope for is the ability to identify temporary stopping points
in trends. If things work out such points will mark the start of a
substantial move in the opposite direction. If they don't, you take a
small loss and go on to the next opportunity. That is what trading
is all about.Carl > Logic tells me that
there should be a way to figure> this out, but so far it has eluded
me. If anyone has> any techniques as to the range of a move,
please post> them.> > --- topos8 <topos8@xxxx>
wrote:> > Last Tuesday, in GG # 22675, I said that the bonds>
> would probably put > > in a strong rally from the 113-05 level
and move up> > into the 117-118 > > range before resuming
the bear market down to the> > longer term target > > of
105-107. This forecast was based on the fact that> > 114 showed up
as > > strong, square of 9 support and that my price-square>
> time analysis > > showed corresponding support just above the
113> > level.> > > > In the event the market
blew right through these> > levels that very > > day. The
fact that we have traded a full three> > points below 114 for
> > three days now establishes the 114 level as strong> >
resistance. I no > > longer expect any rally from current levels to
go> > much past 114. > > Instead it looks like the bonds
have to drop all the> > way to the long > > term target of
105-107 and the notes to their> > corresponding target > >
range of 109-111 before any multi-week, multi-point> > rally can
begin.> > > > However, my analysis also says that sometime
in the> > next 2-4 years > > both these markets will be
back at historical highs> > (historical lows > > in
interest rates). I fully expect to see the 10> > year notes trading
> > at 1.50% and the long bond trading at 2.50 - 3.00 %> >
at the next > > cyclical low in interest rates. That will in
all> > likelihood end the > > bull market in bond prices
that began in 1981 when> > the long bond > > yielded
15.40%.> > > > Carl> > > > >
> > __________________________________> Do you
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