I have backtested before, and again, it has consistently shown my trading to have benefitted from selling halves than getting out all at once. There were many, many trades where the wiggles would have stopped me out with break even had I held out the whole position for my target, whereas when selling halves my number of net profitable trades increased dramatically. As for drawdown, I rarely worry about it, or "opportunity cost", since I rarely stay in a position if it initially goes against me. I'm more than happy to get out immediately and figure out later what went wrong, or re-enter again. And I don't view staying in a profitable position and allowing it to develop as any kind of opportunity cost. Okay, so even though you don't trade bonds, you would have exited the entire position in one shot. Had I done that in this trade, I would have made no money, because my ultimate target was 113, but the price movement wiggled around to the point that I would have been stopped out completely. By selling halves and locking in certain profit levels, I was able to keep wider stops to allow more wiggle room, while being sure that the net trade would be a profitable one. As it turns out, this strategy worked out perfectly, and has tended to work much better than any other system I've tried. Again, to each his own.
I sometimes notice size in the bid / offer used on the electronic bond futures as a fake out ... to frighten traders into getting out or getting into a bad trade
Even after much discussion about when to take profits; I, myself am still not sure of how to maximize the realized profits on the current short Sept bond position. After getting short Sept Bonds at 115'16 on Monday (on what was anticipated as a daytrade) and watching this baby drop off the side of a cliff (... therefore I held short overnight); I'm at a loss as to how to maximize the trade. I've watch my unrealized profit in the position swing from $8500 when sept bonds traded at 111'08 Wednesday morning to $5000 when sept bonds traded at 113 early Thursday morning. In practice I am a daytrader having found myself in an incredibly profitable swing trade, yet I realize that proper trade management can make or break a trader.
My initial stop was at break even, 118, (give or take a tick or two based on bid/ask spread) given that a break below would signify a break of major support. On trades like this, I expect the trade to be positive right off the bat, and therefore if it didn't go my way, I'd back out immediately and wait for re-confirmation of the breakdown. Fortunately, the breakdown worked like clockwork, and I never had to exit at the initial stop. In fact, I'm still currently short 1/4 of the original position.
Why not use above todays high so far of 112-22 or overnight 113 area? Also, it may have tipped its hat by opening above yesterdays highs. If it holds 111-03 and I'd watch shorts VERY carefully. If you really want to be long term use 114-21 as a stop which may be TOO wide at this juncture??
First, ultimately only you can decide what's best for you. As a hardcore swing trader, I would normally recommend the practice of selling halves. However, with the bond trade, there is considerable support at the 109-110 area, so based on the parameters of your trade I would probably sell the position now (as I type we're at 111'25), or move your stop for the whole position to 112 to give a little extra wiggle room if bonds want to continue to move down to the 109 area. However, given how close we are to that area now, the risk/reward wouldn't be significant enough to warrant selling only half now just to try to capture an extra 1-2 points from here on the other half. Ultimately, if we do get down to the 109-110 area, unless something major happens, I'd expect the support to hold and a decent bounce to occur.
I second that motion ... bought back one of two bond positions to lock in profits and lowering stop on the only short position.
Sept Bonds are still trading in a range of approx 111 to 113 for the last 3 days. Given that the bonds are very oversold, the likelihood is that we may see trading above 113 next week. Short sellers should be looking at ways to hedge or cover short positions if bond prices should run up to 113, 114 or even 115. I've employed a strategy of combining my futures position with an option position which results in a hedge to protect from profit erosion. Any ideas for short hedges?