I guess you would need to clarify if you are trading a second after the release of the number of it or just using the volatility caused by the number to put trades on since sometimes there is more interest for the following 30 min to few hours after the release then if there was not a number. However not every news release moves the bond market in the "predictable direction" based on the news releases. However that too is information if you are flexible. The move could have been priced in already or even the miss of the economic number could have been priced in too so the market moves opposite of what you think it should. IF you are flexible though you can trade a market that is doing the opposite of what it should. There are usually a lot of people fighting the move at first trying to go the "correct way" of the econ numbers so you can get fast moves as all those traders get stuck. That should tell you where the market is potentially heading and get you on the right side of the market.
Predictable reactions, how about a weaker than expected Consumer Confidence a couple weeks ago that we proceedingly tanked on because all of the players were short the back end of the curve through steepeners, locals were short heading in, and no one wanted to provide a bid, really tough one to buy when you know you are close to downside stops. I totally agree with Pabst, if initial reaction to number is textbook, and then some other compenent of the number is different, you will be left with a big loser rather quickly. I actually like very small positions into numbers and then trade into a larger position after the release according to what paper begins to do or where possible stop areas are, and other locals positions. Just my opinion. As for answering the question, expect the unexpected with the Treasury market especially with the screen, because moves tend to become much more exagerrated.
Well, when multiple numbers come out and I don't know which one will dominate, I'll just stay out. I didn't say reactions were textbook 100% of the time, but if it was even just 70%, odds are on my side, because when it goes the other way, I only lose 3 or 4 ticks. But when it goes my way, I win some where between 6 to 12 ticks, about 3 times as many as the losses. Again, when I am not sure, I stay back and watch. So besides the volatility when we have conflicting numbers, what else could go wrong? Thanks again for all your inputs.
You presume your intellectual prowess will enable you to "pick off" dimmer participants in the wake of this data. That may be true. But you will be competing for these trades with many other traders who are perhaps quicker on the mouse, better connectivity( I presume you're in Asia a big disadvantage) and who have better news feeds. I'm a guy who ran 10k into well over a million in six months and gave it back as quick. Take my word for it. Won't work.
Just be sure you get every component of each number that you plan on trading on and understand on each component will effect people's view on treasuries. What else can go wrong? I guess fed speak around the same time as an economic number being released. Also, u can get screwed if you are entering trades with market orders during these volatile times i mean if a big order comes in that wipes out a few ticks at the same time you hit in with your 100 lot which is right where there a some major stops you will end up buying/selling the top/bottom and will be immediately screwed for >4 ticks your 100 lot.
100-200 is "small" when these guys are trading on someone else's dime. Then everyone is balls to the wall.
That's exactly right Vulture. Do you wanna sell the market down below value on the data at 16 just because some prick at Morgan took the book sellers from 25 to 17? He doesn't give a shit if the market comes back 20 bid because he'll make the concession to get size on. However when it's your dough the feeling of being out 5 ticks 200 times is pretty daunting.
Pabst, I'm in L.A., not asia. Doesn't make a huge difference either place. I am not using any intellectual prowess doing this, otherwise, I would pre-position myself instead of following moves. As far as the sharp drops go, I've never observed price moving back that fast after a sharp drop. But of course I've been observing for only 3 weeks. I wrote some C++ code to place orders for me thru IB. It reads level II quote. Not relying on mouse clicks, by the way. Anyways, it's depressing what you are telling me. So after the market took back your million, what are you trading nowadays? Everything else is far more volatile and less predictable it seems. Care to share? Thanks!
It would be great if you can answer my questions. Also, what is your news feed? Since you say you trade through IB, I assume you are trading your own money? Please answer. Thanks.