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Wednesday, November 07, 2012

TREASURY BOND FUTURES TRADING AT IT'S VERY BEST




ZB was bought on Wednesday's opening and exited at Thursday's open for a huge one day profit of close to $2000 per contract. Our system told us to buy the market on the opening so we did so. I had speculated that the market would decline based on the election so I was glad to see a long side trade in Bonds indicated for Wednesday. I would have taken the trade even if it had been a short but was much happier that the system matched my gut expectations. I was pretty sure we were going to decline Wednesday but did not have any idea we would crash like we did. Our system did have two losses recently which you can see that were followed by a win then this monster trade. In short term trading it does not get much better than this especially with a mechanical system. 

I am showing this trade just to indicate that you can do well short term trading you just have to have the correct approach. I have not indicated how this works and I am not going to. Would you if it worked this well? I do offer plenty of free content in here as far as technical trading goes but this one is going to remain with me. We are going to be creating several different new things over time to compliment what we already have. A website overhaul is being done within the next couple of weeks. Once that is done we are going to be able to expand into all sorts of things including videos, webinars, and some other free tools. It is hard to trade and run a business at the same time. This is especially true when you are running trading services. I am a trader not a marketing wizard or web developer. I have had to wear all of those hats for a bit now.

We will be incorporating the blog into the new web site so it will be a one stop destination which will make everything work so much better. The general design has already been selected and it is going to be a big improvement. If you are lucky you will be able to avoid my mug shot! The goal with all of that is to integrate everything into one place so we can have more contact and have it be much more organized. I am not going to become a used car salesman don't worry.

Today was one of those outlier days where we had huge ranges in just about everything from Hogs to Crude Oil to the ES. I have never been a big fan of trading days following days like this for a few reasons.

1) Most indicators are completely skewed and need time to "reset."
2) Stops are so big that money management goes out the window
3) They can often be traps




Here is an example of an extreme move in the ES and the MACD readings when it happened. I do not use the MACD so I do not know if the settings I have for it are the best ones, I just used the stock settings Genesis has for it. In a case like this I think the indicator has to completely recycle before you can use the overbought and oversold functions of it. When the values are skewed this much in one direction even a big rally will not get them to the other side. Once a full cycle of up and down takes place you can begin to use levels the way you normally do. I will cover the other two topics at a later time.

I had a request for an updated Euro mystery chart so here it is. The dates are still the same.




You can see the key date is 11/30 and you have to keep in mind one very important point about cycles. They do not necessarily say a top or bottom comes right at the peaks or troughs. What they indicate is price should go in the direction of the cycle at that time. In this case that would indicate we are headed for a tough year next year in the stock market. I have covered this as well as other things I watch when planning for stock market moves in the Newsletter each month. I did cover how I think this plays into other things that are going on right now and what it should mean. We have been a little spoiled by this cycle indicator in that it has picked almost to the day significant highs and lows. I can tell you from experience nothing will be this good at picking every single swing. If we have already made the top and go down significantly from here, I would consider this still awfully good at picking this turn.

There is nothing much new for tomorrow I am letting the dust settle for a day.

Good Trading





7 comments:

Anonymous said...

Thank you Chris for the eurodollar chart - Chris C

John M said...

That bond system is absolutely amazing. You're a genius!

Khalyser said...

Hi DT,

I don't understand how the mystery chart is calculated.

I've tried doing it myself from the data obtained on that page : http://www.cftc.gov/oce/web/Report%20Data/futures_Euro%20FX.html

But I don't get the same results at all.

Am i looking at the wrong data ?

Jim said...

When did you get into the Wednesday trade in bonds, the open was way up from Tuesdays close.

Chris Johnston said...

We bought bonds it two places first at the open which was not way up from the close it was basically even with it. We use the Globex open, the pit open is irrelevant in today's markets. Second in our Swing Service we went long at 149'16. We exited the swing trade yesterday taking profits and the bond system at Thursday's open. If you are just watching the pit open you are missing the boat in the bond market it has been irrelevant for quite some time now.

John - :)

The Euro mystery chart is not going to be able to be created from the COT data directly you are going to need software that displays it. There are a lot of data providers that import COT stuff. It does not change, the values are known for the next year now so you really don't need to keep looking at it.

Jim said...

Thanks for clearing that up, I was looking at the Wednesday mourning open of the day schedule.

So for that bond trade you give that out Tuesday afternoon ?

Thanks

Jim

Chris Johnston said...

Jim, yes the orders go out the prior day for action once the globex session opens at 5 pm CT. I do not even pay any attention to the pit open since the market is close to 24 hours now. I cover that in my website. That recent trade I showed was gangbusters, rarely does the market move that much in one day but it does happen from time to time.