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I traded like absolute crap today. I didn't realize it too until I was doing my daily debrief and looking back over the trades I'd taken throughout the day. I'm going to transcribe what I was writing as I watched it back.
"Terrible and stupid first trade today. I sold right ZN right as ZB cracked highs. This was stupid and unforgivable. Right as I entered, I said 'Oh, I don't like that...' and I should have puked the trade immediately. I was in the loser for too long."
"1) Shouldn't have taken it if other markets are hitting puke points.
2) Should have immediately exited when 2500 pushed up against me.
3) Should have recognized the 900x3500 was a buyer stacking the offer in a bait to get filled.
4) I wait too long to get out of the losers when they're clearly bad trades."
"Trade 2 (which I pulled before a fill):
I saw ZB again pushing highs, said 'I see ZN absorbing' and yanked my bid. What was probably happening was somebody WAS the offer to get a few contracts off, and then were going to pull to get a tick up for the next offer. Had I followed the bulls and the momentum, I would have made 10+ ticks today."
"When my weird long was in trouble, there were bids getting pulled every time it traded 20 to 50 into the bid. That was the key to get out. Bids pulled from 2000+ to 500. The final trade I should have taken was an absorption trade as I spaced out after having other losing trades. It was the clearest trade all day long. 5000 absorbed, it went offer and cracked 3-4 ticks. Easy damn money."
"Trade Better
1) Watch bid/offer on both sides for signs of organic pulling. Match that to context.
2) Follow the ** momentum unless there's a very obvious absorption play.
3) Be okay with exiting if the trade feels bad. You're a discretionary trader. Use your discretion and make better choices."
The theme of my performance this week was "Taking the Wrong Trades". I took 1 tick out of the market all week long, and managed to give up 7. The thing is, too, that there were plenty of great trades this week! On Wednesday, I decided to fade the move back up after the initial drop. I got stopped out. Then, about ten or fifteen minutes later, there was a beautiful absorption play which actually market the mid-morning high. I simply made bad trade choices this week. I made myself see trades when there were none, and then I found reasons to avoid the good trades when they came around.
I was doing some trade review/learning later in the week too and I just kind of realized something. I'm good at seeing absorption. I can recognize when 4000 contracts are hitting into a price and that price doesn't move. I'm bad at the context plays which depend on volume profile, time of day, relative order size, and other things.
For the rest of the month I will be focusing my efforts on absorption trades. This doesn't mean that I'm fading! This only means that I will be taking the trades when I see and can interpret absorption. In watching the trade playbacks, I saw about three solid opportunities (on days which I punted like a moron) which were good for 4+ ticks each.
If I want to trade well and start making money, I need to pump the brakes on "spray trades" which have no reason for existing. I need to refine my approach and really focus on taking the obvious trades. This doesn't mean that they're always going to be winners--I saw this quite clearly a few weeks ago--but this means that the size and volume and big traders are on my side.
I've included my performance to date below. My expectancy is at -0.83, below my target of -0.5 for the months of Jan and Feb. My Feb expectancy is -0.38, which is better than Jan's -0.96. I also spoke with my broker recently and he reduced my commissions again, which should help with the actual dollar value expectancy of -$9.01 for February. My average winner is greater than my average loser, but my winning percentage is hardly 30%. The more I think about this, the more I realize that the issue remains with taking garbage trades. I need to focus on the price action and order flow that I understand and can capitalize on.
Goal for this Week: Take good absorption trades that I can rewatch and say "Yeah, that makes sense", instead of guessing what the hell I was thinking in the moment.
_________________________________________________________________________________________________
In the equity space, I expect to see a resumption of the downtrend. I think this last week's volume in the equities was strangely thin and I am anticipating a dead-cat bounce to retest the 2529 lows in ES. Treasury yields continued to flatten this week. The 5, 10, and 30 are at 2.63, 2.87, and 3.13, respectively.
That 3% level in the 10 year is going to be interesting...
Doing a bit of math gives me a price of 119-075 in ZN for 10 year yields to hit 3%. That's pretty damn close, in the overall scope of things. Below is the plot I generated for this prediction. I created an n-poly fit, pulled price and yield data since 1/2/2018, and let MATLAB do the rest of the work.
@lax99
Yes, I agree!
I'm wondering if we get a second bout of extreme volatility in fixed income, triggered again by equity markets, when we push through these marks.
Spreads have been reasonably easy to read with fatteners paying until recent (some curve steepening of late driven by inflation/inflation expectations, which has driven the back-end higher).
It could get pretty messed up as me move forward.
Further Fed hikes (which will drive front-end yields higher and flatten the curve), alongside inflation and supply concerns (which will drive back-end yields higher and steepen the curve).
A battle royale!
I like it when it's easy
Strap yourself in!
I've never traded in this type of environment before. Have you? I--and I'd wager much of the marketplace--don't know what an inflationary environment with rate-hike expectations looks like for the bond market. It sure makes things interesting! The last time that the US10Y touched 3% was in 2014; before that, 2010 is the first instance of persistent 3% yields. Treasury yields have been bearish since the 1980s! I wonder if any traders here on futures.io were even in the game back then...
It seems that the game as we know it is changing. Strap yourself in indeed
can you share your experience with the liquidity of the ZN?
I'm currently papertrading the ZN mostly in the 5000er Volumechart and the 500er tickchart.
My TP is mostly 2 ticks, the SL 2 ticks, sometimes the ration is 3/2 or 4/2 or 5/3 (depends on the volatility).
So far the PAPER- RESULTS are good. I have chosen the ZN because its huge volume and relatively smooth moves.
Question: Do you have traded with 10 or even 20 Contracts/per trade? If so, did you get filled or is there large slippage?
thanks for answers...(of course anybody who has knowledge regarding this issue is welcome....)
Long ago I traded around 10 contracts, but that was before I really started honing my approach and dedicating myself to order flow. I never experienced significant slippage then. I trade a 1 lot now (which will basically never see slippage) and part of the reason that I trade ZN is because it is so damn liquid.
Are you on Ninjatrader? I trade on the Jigsaw DOM. I'd suggest pulling up the DOM in whatever platform you currently use and look at the bid/ask size at a few price levels. Typical ZN liquidity is between 300 and 3000 contracts. Of course, depending on the order flow games being played, order size will vary. But what this basically means is that, regardless of your size as a retail trader, you will have no issues with slippage or liquidity.
Now, when we had the crazy ES crash two weeks ago, ZN liquidity dried up and 100 contracts could pop a level really quickly. But in normal trade, expect that your 10 or 20 or even 100 lot will see very little difficulty getting filled and will not see stop slippage.
One last thing--be careful with your paper trade results. It can be quite easy to say "Well, that trade was silly for these reasons, and I'd never take that in real life". These mistakes will propagate into your actual trading though. That's where it becomes super important to trade well!
@lax99
I began trading in 2003 (see image below — FFR. The small green rectangle box is when I began trading).
For most of my career, we've been in a low rate environment.
What was it like trading in 07-09? Was there a fundamental shift that you felt in the months leading up to the crisis, or did it just kind of happen? How did the trade in ZN behave differently during that period?
Apologies if I'm peppering you with questions--I find the whole period fascinating!
)