The Challenge

[bond_trader1]

OK, so I'm back after a relaxing break in France.

A quick update on my current situation:

8 months of the challenge remaining.

Starting balance: £1,000

Target: £10,000

Current balance: £725

One third of the time gone and I'm still in the red...oh well, miracles can happen...

 

[bond_trader1]

Not the safest time to trade this longer term...

Support is now offered by the rising TL (rather steep) and the horizontal S/R flip around 113.40.

The two higher horizontal lines (114.60 and 117.00) look to me to be strong S/R pivots although you cannot see how price has interacted with them previously, on this chart.

 

[bond_trader1]

There was a one hour pin bar at a good area of confluence on the Bund earlier today.

The price had hit a descending TL and just above was a decent resistance (S/R pivot) and the 61.8 fib level from the highs to the recent lows.

I went short at £4 a tick with a stop loss of 20 ticks.

I should have exited at the confluence of horizontal support and ascending TL (which is where price bounced) but I didn't - I trailed a stop a tick above the pin bar that indicated a move in the opposite direction and it was hit, leaving me with 4 ticks profit, or £16.

 

[bond_trader1]

Target or trail?

One question I would like to put to my readers is this:

Do you trade with profit targets? By this I mean, do you have a profit target price in mind that you are automatically going to close out at when it reaches?

Maybe you have a target price in mind but you wait to see how price reacts to that level when it gets there. In this scenario, you would only close if price turned at this area.

Maybe you have no real idea how far price will go and will look to trail your stop, perhaps at certain S/R levels or at previous bars etc.

Exits are very important - I am realising this more and more and would be very interested in any help/advice any of you could give me in this area.

 

[bond_trader1]

Well today I tried taking profit at a target level and that worked much better. Infact I closed my position just two ticks off the low of the day!

There was another pin bar in an almost identical position to the one I took yesterday and once again it's nose came almost exactly off my S/R pivot.

I went short at £5 a tick with a stop just above the high of the pin and a risk of 18 ticks.

Price went sideways for five hours or so and then fell through the floor. As soon as it was convincingly through the ascending TL and support line I moved my stop just above it (into profit) but by the time price had reached my third S/R level, I decided to close.

As it happens, this was exactly where price began its retrace.

The trade made me £155 (31 ticks) which is my best result so far!

P.S You may notice that my ascending TL has been redrawn from yesterdays chart. It connects with today's high perfectly now. Note that I didn't trade off this (since at the time it would only have been connecting two points which is NOT, imo, a TL) I have done this to plot the area where price may stall in future.

 

[bond_trader1]

You can go back even further than this and see areas where this pivotal S/R has come into play...

 

[bond_trader1]

This area looks very important...

 

[bond_trader1]

Easy does it...after today's win I'm not too far from breakeven in this challenge.

My equity level is £896.

 

[fibonelli]

Hi BT1,

Good to see you profiting from the after 3pm waterfall. I was eyeing the Bund but after a relatively tame ISM report, I went to make myself a drink and I missed a third of the 35 pt move down Blimey, that was very fast!

Anyway, this was my analysis from the 30 min chart (double click it)

Significant resistance @ 11384 and above
Many upper tails (yellow)
Bearish momentum divergence (brown)
Bollinger Band Contraction (purple circles)
Several inside bars (sky blue)

Interestingly, the price smashed through many support levels but found support at the 161.8% extension of 11385 to 11354 (not shown).

I agree with your daily analysis, certainly at a very interesting point. Don't forget to keep an eye on the equity markets.

Regards

Fibonelli

 

[bond_trader1]

Hi Fibonelli,

Good analysis on the chart there.

I don't use fib extensions yet - I am really just getting to grips with fib levels! Still, the area where it turned up again was a S/R level which is why I closed the position.

I see the Bund is up this morning although it has just made a two bar high just beneath the 50 fib and that descending TL. Price looks like it may come under pressure again...

 

[bond_trader1]

Thought of the day...

The only problem with trusting instinct over a price action setup is that when it goes wrong you have nothing to blame - and more importantly, no statistical probability to take comfort in.

 

[fibonelli]

Bund 30 min chart showing a bullish falling wedge. If this pattern plays out, there will also be a bullish momentum divergence too!

 

[bond_trader1]

Bund 30 min chart showing a bullish falling wedge. If this pattern plays out, there will also be a bullish momentum divergence too!

Fib, I personally think the Bunds have more downside today. At least to 114.00

 

[fibonelli]

Fib, I personally think the Bunds have more downside today. At least to 114.00

Pattern failure! Well called BT1

Cr4p short entry, got caught on a one minute up spike (5 pip loss)
I now know where I went wrong and have taken notes and a screenprint.

 

[stir-trader]

Flipping

I hope that the following will help you to understand what the 'flipping' strategy involves.

The trader, be it paul rotter or some one else, will make the price action look as if it is going one way which encourages traders to enter into the trade then 'bang' the market is trading the other way.

Here is an example of selling into one of these moves.

First it starts when he makes an offer look really big so it looks like solid resistance. Then the bid below starts getting get hit in a fast momentum style, that draws the scalpers in who are after a quick trade. Chances are it is the person employing the flipping strategy that starts the selling. He stops and the scalpers carry on but now the scalpers are hiting his bid. Once his Bid has been filled to his requirements, he then flips his big offer and takes the price bid for size and often a few prices higher.

These sort of trades involve many thousands of lots so doing 200k in a day is easy especially in the bund. I've seen a 100k in under a minute many a time.

This means that all the scalpers who had been suckered into hitting his bid have positions that are a few ticks offside and as scalpers they have to get out pretty quick unless they have deep pockets thus lifting his offer and the trade takes place in a matter of seconds.

Try and imagine selling 1000 bunds 11414 and then 2 seconds later its bid for 11k at 11418 and the bid is getting bigger with every millisecond. That will hurt anyone. The first place you can get out immeadiatly is 11419 and then your lifting the person who has flipped you.

You need brains and size.

Nice if you can do it.

 

[bond_trader1]

Thank-you for that explanation stir-trader...its fascinating how these games are played...

 

[minx]

Try and imagine selling 1000 bunds 11414 and then 2 seconds later its bid for 11k at 11418 and the bid is getting bigger with every millisecond. That will hurt anyone. The first place you can get out immeadiatly is 11419 and then your lifting the person who has flipped you.

Unless you hit his 11k and offer it lower 5 prices in quick succession- then he gets out. Of course you have the other parts of the curve ready to spread in case he comes back in for more.

 

[bond_trader1]

Unless you hit his 11k and offer it lower 5 prices in quick succession- then he gets out. Of course you have the other parts of the curve ready to spread in case he comes back in for more.

OK, now we're going above my head...

E*trade is still taking the other side of my trades right now

If I win my challenge I would like nothing more than to come and join the big boys...

 

[stir-trader]

You make some very valid points Minx. But that is assuming you got the size to try flipping it back but like i said you need real deep pockets and the guys that play with your strategy have very very deep pockets. I have seen this happen before and it is entertaining to watch. Often when they do these sort of moves they flips the bobl and schatz at the same time so you dont have much opertunity to spread and the euribor can be just a waste of trades as you lock in a loss. I suppose if your really lucky you'll get away with minimum loss.

 

[fibonelli]

Stir-trader,
Thank you very much for explaining the machinations in Euro Bond land to us newbies.
F