Bone's Monday 03-09 Spread/Scalping Game Plan

Discussion in 'Educational Resources' started by bone, Mar 8, 2009.

  1. bone

    bone ET Sponsor

    Here is a synopsis of what I plan on looking for with my trading on Monday:

    Equity Pair Day Trades:

    I am very bullish EXC vs SPY weighted 2:1; looking to buy it hard around 19.10. I will be buying dips here and holding until the close.

    I am moderately bearish IBM vs SPY weighted 1:1; looking for a smallish sell at the open and press a winner only; it has rallied hard since the last week in Jan., and I feel like it is starting to look like a short day trade, especially on modest rallies. Don't add unless it's already a winner.

    Interest Rate Yield Curve:

    I like buying CBOT 2 Year Note futures versus 5 Year Note futures on Monday, but my inclination is to slightly underweight the 2s on DV01. Good levels are right around Friday's close.

    Forward Energy Curves:

    Stay away from April Nymex Crude - the Contango roll will roll me.

    For the weighted May-June-July Nymex Crude Butterfly, I feel somewhat neutral, but have marked on my TT and CQG Sell levels at -3; moderate buyer at -27; load up the farm at -39

    For the weighted April-May-June Nymex Natural Gas Butterfly, I am a seller @ 61 and a buyer @ 40.

    Flat Price Directional Inclinations:

    I am not a directional flat price trader per se, but starting to feel frisky about buying dips with Natural Gas on the run-up here to Summer. I'm not terribly aggressive because weather forecasts and power demand isn't notable as yet for the summer, but on a BTU-adjusted basis, BTU spread traders have to like Natty in here on the dips for moderate nibbles - just a taste.

    Best Scalping correlation: Sept. 09 Eurodollar future and March 09 Yen future. Run parallel 2 minute bars on each with a 14 period RSI (HLC3) and a 10 period MA on the RSI. Look for confirmation for your tendencies and inclinations - not the Holy Grail. BUT, good intermarket correlation work will keep you scalpers and day swing traders in a good trade and help convince you to dump a stinker.

    These are the types of trades I would like to teach on the membership website I have planned for the very near future. Even directional swing traders and scalpers will benefit greatly from the intermarket correlation analysis and a greater understanding of what is influencing their markets.

    Because of my daughter's health and my pending Daddy DayCare duties, I may only be able to trade for two days a week or so, so interacting with the members in the afternoons and evenings would be a great way for me to offset a little income and keep involved in the marketplace. I reserved the domain name 'spreadprofessor' today.

    Thanks all, and you will be hearing alot more from me in the very near future.

    Plan your work and work your plan. Never give up. When you're ready to quit, you're closer than you think.

    Above all, don't be retail. Trade like the real pros trade.

  2. bone

    bone ET Sponsor

    Thanks to all for the PMs with the words of encouragement - especially those whom I have been able to help in the past.

    Informational footnote: 1. There are about 100 equity pairs and about 50 futures pairs/butterfly/condor spreads that I monitor and could possibly trade during the course of the day, and 2. I do from time to time trade flat price directionally, especially because spread correlations are so effective at determining individual leg performance, and 3. I don't think traders should necessarily switch charting packages or abandon their favorite markets or themes (scalping, day trading market swings) to take great advantage of my expertise. Nearly all of the really huge and successful futures day flat price directional traders (and I do know quite a few of them) takes real advantage of inter and intra-market correlations, much more so than has ever been discussed here on ET or on other advisory service websites that I have seen at least. 4. I really hate making predictions like I'm some kind of CTA or something, but I thought it might be useful for ET members to see how at least one real Pro prepares and lines up his day in advance. Finally, 5. I am a great believer in carefully watching order flow (tape reading) during the course of the day.

  3. bone

    bone ET Sponsor

    Pairs Update

    IBM vs. SPY: Superb

    EXC vs. SPY: Flatish-Scratch

    Twos vs. Fives yield curve: Superb

    Energy: nothing yet on the Nat Gas and Oil Butterflies-resting orders in the book
  4. bone

    bone ET Sponsor

    9:05 am CDT

    got out of the curve and IBM; nothing yet on the energy; sold MCD and bought CPB at great levels; keeping the EXC vs. SPY - still like it
  5. bone

    bone ET Sponsor

    Twos to Fives paid $300 on a two to one lot with half the margin of a directional five year future;

    IBM vs. SPY paid $2.00
  6. bone

    bone ET Sponsor

    Buying a single two year note future and selling a single five year note future paid $312

    the entire trading range in the five year note future from 7:30 to 9:30 was worth $500, and you would have taken alot of heat and chop and used twice the margin
  7. bone

    bone ET Sponsor

    All in all, a good day today. All the equity pairs were winners, as was the yield curve.

    I didn't get any energy spreads off - very unusual for me.