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Bobr,
The best feature of T-Bonds for short
term traders is that usually their intra-day or short term volatility is very
high relative to their yearly volatility. For example, it
would not be unusual for T-Bonds to have a $2 range
during one week. If one could
capture only $1 per week (about 1% of price) per
week, that would $50,000 per contract or about 50% of price. In contrast, in the
past 20+ years, I don't think the biggest move for T-Bonds was probably about
25% in one year and usually it's closer to 10%. This lends itself to
trading for short swings around a mean or trading range. In the bigger
picture, Bonds are like the supertaker of financial instruments.
They may take weeks or months to form major tops or
bottoms. Once the wave is in force, it tends to go for years or
decades.
Regards,
Norman
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
BobR
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="">realtraders@xxxxxxxxxxxxxxx
Sent: Monday, July 21, 2003 2:07 PM
Subject: Re: [RT] Fwd: Re: Bond
update
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> > >
> > > > __________________________________>
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