Bund Trading

Hi all,

I ve been trading short sterling spreads the last 3 months with a small success in the first two months. Since i dont trade the outrights its starting to get a little bit boring just trading in the matrix and recently have been involved with some overtrading just to keep my self occupied. Anyway, I am seriously thinking of trading the bund at the same time only at fast short term trends with a 5 lot limit for a start give it a go and see how it goes. Any advise on that thought?

Thanks

Simple question really. Do you have an edge? Apart from an understanding of how the curve moves I don't think there's much you can take from Short Sterling spreads and apply to Bund outrights.

Yeah I suppose u are right... I ll do the Gilt

Mp

In all honesty,I think your first plan was the best one.Gilts pretty much track the bunds only with rubbish volume and usually a two-tick market - and after the settlements are done (4.15ish UK time) the whole market dries up.I've posted on other threads my views on the Short Sterling and really couldn't recommend it to anyone but if you've been trading it and doing OK then at least if you're trading that as well as bunds then any money you can still make in Short Sterling will keep things ticking over while you experiment in the bunds as you sensibly say with a 5 lot limit to begin with.

I traded Short Sterling very actively for a while and encountered the same problems you seem to be having - over-trading when nothing is happening and becoming frustrated generally with how dire it is compared to the other STIRS.

One thing I would say before trading the bunds and I don't know how much experience you have so forgive me if I sound patronizing but if trading for fast short term trends always know exactly where your stop is and stick to it because averaging in there can take out your whole day(and more) very quickly.

Good luck!

Agreed. No point in trading the Gilt, unless you want to trade it versus the Bund on spread.
The bund is currently in a down trend, but the European curve is flattening and lots of central bank and real money accounts tend to be buying at lower levels. Therefore, it is quite hard to hold a short position. However, one thing that tends to be working quite well at the moment is to wait for stops to the downside to occur, look for the recovery, and then sell. (The reverse also worked well when the price action was more constructive). This is currently working better than simply going with the "fast" short term trend.
Ahead of the ECB rate announcement on Thurs, I think you want to look to play the bund from the short side. There is Austrian 10 year auction (only 550mm though) on tues, French 10s and 30s on Thurs, and widening US-Europe spread. Watch for hourly price movements. e.g. what happens between the open at 7am and 8am is often reversed in the next hour. between 14:00 and 16:00 london time, the bund has so far this year greatly outperformed other time periods. this is largely because of deal pricings.
There are lots of things you can look for. Just make sure (as above) to choose stop levels and equally importantly to run your gains. The bund is at historic high levels and could easily retrace a number of points in a few days.

I didnt find any of this advice great as per your initial question.
If you feel a calling to bunds then give it a try. You sound technically minded as you watch for trends, so use your common sense and trading experience as you related it to other trading and incorporate that into bunds.
Specifically, Bunds can be a monster from a technical point of view - nothing technically works all time. Use whats working for you, then be prepared to chuck that tool away again when it stops working for you.
Currently Fib working quite well at the moment, but there is always a degree of latitude with that as always.
regards
BB

Ok all many thanks for your advise

Bunds are wonderful from a fundamental point of view..