TRADERguy, Because of you I made some very nice pips today, because last week you said here in this thread that you used T-notes to trade the news. When they went north after the numbers, I knew the dollar must go south. Thank you. Did you also ride the rally in T-notes? Maybe you could tell something more about bonds/notes-currencies? Sleeping point? Yes, I suppose what old Bernie meant was that if you carry too big a position, you can't sleep because you are afraid to get a big loss or your profit will run away. You must reduce (sell) your position down to the point, where you can sleep. The sleeping point.
I trade between 10 and 100 round turns per day (per lot). I trade less on trend days and more on days when there is less directional movement (or I am less sure of where it is headed). On trending days I try to exit when the price becomes over-extended and I get back in at a better price when it has retraced (either to the Bollinger band for really strong trends and to a moving average (whatever period ave. it's pulling back to) during less violent trends). When I'm less sure of the directional movement for the next few hours I trade short term. If there is directional movement, on average I bank (after transaction costs) about 110% of the range that occurred during the hours I trade. The nice part about trading shorter term is that you can make $$$ during the days when it's sideways trading; sometimes banking twice the range even when the price finishes within a few pips of where it started. The negatives for trading this way: (1) it is stressful, requiring your undivided attention during every second of the time that you trade; (2) it is daytrading and you will not bank any of the movements that happen during the hours that you are not staring at the screen. On the positive side you can sleep like a baby knowing that you are flat.
Baruch - like yours, this is simply a 'trend following' strategy. Once in an obvious trend, I simply look to add in using the natural rhythm of the market. On rapid moves thru the levels (as this present move has shown), as long as the trend remains intact, I'll add in according to the 00 level breaks & accompanying T/A. Until the trend looks like it's run out of steam/breaking down, then I'll refrain from selling against it....preferring to treat pullbacks/consolidations as further buying opportunities. By observing the larger time frames (for prev resistance clips) & allowing the price to dictate whether or not it's reached a climax, my stops will tell me this particular move has exhausted it's climb.....I have absolutely no idea when this bullish move has ended, and may well consolidate at the high's in a ranging channel for a week/month or more?!....but once I'm stopped out, I'll revert back to my intraday strat, looking for the next potential move (North or South)....once it begins to trend back thru the 00 numbers, and accompanting t/a dictating, only then will I look to 'sell' into a possible larger retracement. The trend is king on any potential entry, and I simply observe the natural swing of the mid term direction, playing the intraday strat, attempting to catch a longer term swing on part of my position size...... I hope this explains my thinking, if not please pm me & I'll further expand....I don't wish to clog the thread with my ramblings
OK- First of all trading the 10 year note on numbers is better than the 30 year bonds. Since they stopped issuing the 30 year the liquidity has dropped. The first thing you need to do before trading the 10 year notes on a number is to look at a daily and/ or 60 minute chart to see if they are overbought or oversold. If they are at either extreme be very cautious about going towards the extreme (selling an oversold market or buying an overbought one). I only put on a position immediately if the number(s) is out of range. Bloomberg surveys economists prior to each number; I throw out most outliers especially if they are not a major and well respected institution. I alter this range to be on the safe side if the market is overbought, oversold, or I feel that traders have a different bias than the economists. To illustrate this last point (and this is from memory so please don't correct me if I'm off a couple of $k), take the last non-farms payroll number. The Bloomberg survey had the estimate at 170K. The derivatives future/betting auctions (run by Goldman I think) had it at 186K (US the day before) and 193K (EU) a half hour before. The whisper number was in the low 200's; I don't know how to get this number, our analyst gets hold of it--I think its the rumor from the floor--was in the low 200's. So given all that I figured the safe # to sell at was 225K+. It came out at 287K so it was a no brainer. By safe number to sell, I mean see it as it comes out on Bloomberg and sell it instantly before I look at anything else (including the price). If you do not have access to Bloomberg/Reuters then I would say to look at the price first except for sure fire out of range numbers like the above example. On really important numbers (nonfarms and FOMC statements lately/ inflation #'s increasingly important) there will be at least 2 waves in the move. The first is when all the futures speculators click on the number. The second is when the paper (cash market) starts to move. Because of this you should be able to trade important #'s that are out of range even if you get the number from a source that is a little slow like Bloomberg TV. P.S. Never, ever, ever trade the unemployment #, always wait for non-farms.
Buk, thank you. Now I understand your strategy much better. "The trend is king" - I love that. I am looking forward to follow your comments and trades with your system.
TRADERguy - thank you. I really learn a lot reading your comments. I hope very much that you will continue to share your big knowledge with us. But what about the numbers today? Well, I suppose they were as expected? But they made big moves - not only in currencies, but also in 10 year notes. Why? And how did you trade this? Another thing: the whisper-numbers. From where can we - who don't have our own analyst - get those numbers, so we know the real consensus among traders?
"Success in speculation requires as much specialized knowledge as success in law or medicine or any other profession. It never would occur to anyone to open a department store in competion with Macy's or Gimbel's or to make motor cars against Ford and General Motors without prior training or preparation. Yet the same man will cheerfully toss his savings into a market dominated by men who are as expert in their line as Macy's and the auto makers are in theirs".
9.00 GMT EUR: Personal Income, Economic Sentiment and Flash CPI. Important numbers for the euro. Are their any growth in Europe? 12.30 GMT US: Personal Income and Spending. 13.45 GMT US: Michigan Confidence. 14.00 GMT US: Chicago Purchasing Managers. The important US number is confidence. Consensus is 95.0 - a bit more than the last number: 94.2. But what about Iraq, terror and high energy prices? A nasty surprise here could send the dollar more down before the weekend.
We just had the German import prices from April: + 0.5%. Without oil: + 0.4%. Coals prices has jumped more than + 10.0%. Not as much in March ( + 1.2%), but the increase shows a sharp upward pressure on producer and consumer prices in Europe, which must worry ECB very much. They hate inflation. No more rate cuts.