Any experienced T-Notes/T-bonds trader advise me how many ticks(1/32) could be expected for day trading? And how many ticks for stop loss is reasonable? Any comment is welcome. Thanks!
There is more than sufficient range to day trade notes/bonds. The answer to your question regarding stops depends on your risk tolerance, trading style/ability/goals, and account size. Do you want to scalp or trade for larger moves? If you're trying to scalp for 1-2 ticks/trade then obviously an 8 tick stop is unwise. Conversely, if you are looking for larger moves, you will have to adjust your stops accordingly.
Hi ADX_Trader, I was daytrading Bonds on a 15- and 30-min. Chart. I used 6 ticks as my initial stop loss and realized profits on 1/3 of my position, when I was up 6 ticks. On the other 2/3 of my position I used a trailing stop on a 5 min. Chart. A couple of months ago I quit daytrading the Bonds, and started trading Spreads. My favourite spreads are ED-Spreads and the NOB (Notes vs. Bonds). I attach 2 pics of these spreads. Look at the NOB-Spread: Each point on that chart is worth $1,000. And the best: For trading 1 contract of the spread you just need appr. $1,150 margin. Maybe you get an idea now, why I switched to spread-trading. Spreads move less dramatically, but when they start moving, they make really good moves. Markus PS: I just realized, that I can attach only 1 file to this post. You can chart the ED-Spread using EDZ2-EDZ3.
Markus Thank for your comment. Do you feel for short-term trading (I used 1 and 5 minutes charts) 6 ticks are quit good profits?
ADX_Trader, that's interesting: What entry signals do you derive from a 5-min.-chart? I changed to 15- and 30-min. charts, because on these charts I could identify some nice chart patterns. Are you a scalp-trader? If so, 1-2 ticks would be sufficient for you. When daytrading the Bonds, I was looking for 2-3 trades per day, that would give me $1,000. But honestly speaking, I was not making "the big money". I was not losing either: my account size was about the same during my daytrading-period. That's why I switched over to spread-trading. However, when daytrading the Bonds I used Joe Ross' chartformations (1-2-3 Highs/Lows and Ross-Hooks). You can download a copy of this concept from his WebSite: http://www.tradingeducators.com/trading_philosophy.htm (click on "Basic chart formations"). Good luck, Markus
Markus, Nice call on the NOB Did you open your position when it just broke the neck at around 1.9 - 2 ? How do you establish stp loss in this spread? My swing stp loss on one future usually based on the previous day hi/lo + few ticks or some important support/resistance, but with in a spread, you have 2 commodities ... I also look for Ross Hook, but as you know, his stp loss is quite far Cheers!!
Dojibear, In entered the spread at 1.92. I place my stop loss based on the margin of a spread, because the margin reflects the volatility. I am risking 50% of the spread margin, i.e. $600 per contract on the NOB (Margin is appr. $1,150). That's more or less the same concept as you use: based on volatility, but doing less calculations (I am a lazy trader) Markus
Markus Thank for your help. I am not sure whether I am a scalper or not. Usually I only hold a trade from 2 minutes to 30 minutes. I seldom hold a trade longer than 2 hours. I am trading ES/NQ but want to add bonds and others. I don't know much about spread trading but I want to know more about it. You said one point in your chart worth $1k, I think it is quite big as it can happen in just one or two days. Is spread suitable for day trading? I hate those interday gaps so I would not hold a position overnight. Would the effect of those gaps less harmful in spread? Thanks!
Is spread similar to arbitrage? What is the major difference between them? If it is less risky than outright trading why are they less often discussed in the media? Thank for any comment.
ADX_Trader, Spreading is one of the most conservative forms of trading. In my opinion it is much safer than the trading of outright futures contracts, because you don't have these huge interday gaps. I would define spread-trading rather as "hedging" than arbitrage: You are selling of one or more futures contracts and purchase one or more offsetting futures contracts. I was told, that the professionals on the floor do it every day: At the end of the trading day they hedge their outright futures position by buying or sellling offsetting futures contracts, e.g. when being long Dec Corn, you sell -let's say- May Corn. The next day they drop the losing position and keep the winning one. Unfortunately we can't do that, because usually the commissions are too high for "outsiders". However, for me it is a very profitable way of trading. These days I am exclusively trading spreads, because I don't want to be burned by these wild movements in the outright futures (e.g. wheat or soybeans). Don't ask me, why it isn't discussed more often in the media. During my research I just found 2 books, that are covering that subject. I heard the first time about spreads, when I visited a seminar of Joe Ross. On his website you'll find a primer about spreads. There is some hype at the end, but if you can look through it, it is a nice introduction: http://www.tradingeducators.com/trading_philosophy.htm (click on "Spread Trading") Markus