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Hi all, I'm just starting out on my futures journey after trading Spot Forx for a few years.
I am looking to build a portfolio of around 12 instruments that I watch daily on 3 - 5 range charts depending on their volatility. I'm a day trader. Mostly looking for simple pullbacks as trend continuations and looking for failed breakouts and tests at significantly higher time frames (60min) support and resistance. All this is based on looking for trapped traders and trying to place myself where their triggered stops overflow will carry my trade at least for a sclap. I just use price action and a greyed out 20 ema that's it. I try to look for smooth flowing charts. This has kept me away from the ES so far as recently I see a lot of chop although I know its very very popular with day traders.
So far I look at the 6 major FX Futures
CL
TF
YM
FDAX
NG
So I have one space left and would like to add a bond. As I starting point which bond should I be looking at that has good volatility and is suitable for day trading. Also since I might be looking for a 4-6 tick scalp I need a bond that has no more that a 1 tick spread. I realise that eventually I'll become more familiar with bonds and can make my own better informed decision but as this is my first exposure I'd be thankful for a point in the right direction.
Oh bye the way I'm from the UK and can comfortably trade the UK and US open.
Many thanks for the anticipated info and advice..........I'm eager to learn
Bonds are quite technical, much more than index futures.
You are competing with bond traders who understand forward rates and yield curves.
You should be aware of treasury auctions and there impact on market prices.
You should understand intermarket relationships, as the bond markets are often considered a safe heaven, when fear is spreading, you need to monitor
- the dollar index
- the main FOREX pairs
Also there is little price action compared to index futures or commodities like CL. Scalping bonds does not make sense to me unless you are want to catch the spread between the bid and the ask, but this would be a strange endeavour, as you compete with large players not paying retail commissions.
Maybe I am wrong here, and other comments are welcome.
The liquid bond - or treasury note - contracts are ZB, ZN (CME) and FGBL (Eurex).
Thanks Fat Tails, This was the type of informed answer I was looking for since my current knowledge of bonds in next to zero. I'll ponder what you said, but with their being so many markets to choose from perhaps I'll look for a less technical instrument to compliment my simple trading styles need for smooth price action and good liquidity/volatility.
Would you have any suggestions, I'd appreciate your thoughts. One that I am considering is the DX .....Thanks again
I am trading ES, YM, TF and sometimes FDAX. Often I question myself, which of these is the appropriate instrument to trade. Each of them has a different character. In my opinion FDAX is very volatile, a bit like crude oil, maybe due to lower liquidity. …
It started with index futures, but includes other instruments as well.
DX is not suited for scalping, as it is not liquid enough. If you want to find liquid futures contracts, just have a look at the daily volume. DX has about 25,000 contracts traded per day, which is not bad, but not enough for scalping. You could look at
Wow this is a great help, I'm off now to read through the link you posted, yum yum Many thanks for taking the time to answer my basic questions,,,,,,,,,,,
From my experience it is not a good Idea to watch and trade to many markets, since they are all correlated there is not much argument for diversification
Since you are a Beginner, I would recommend maximum of 2 markets, and better trade more contracts in a market where you make money...
I trade for 12 years and I trade only 1 single market: ZB
nostrabus, thanks for the advice and I think I may end up agreeing with you. I'm waiting for my Optimus account to fund from my UK bank and in the intervening weeks I've been demoing the 10-12 markets on 4 range bars and it is probably too difficult to watch them all. If anything I'm inclined to lose my focus scanning them all.
I think to begin with I may just look at the 6E and 6B for the UK open and maybe the YM or TF at the US open. One thing Mike said somewhere and it resonated with me was his liking for the CL as he knew each day would give him lots of opportunities and so kept him from over-trading as he knew there was a good possibility of a significant more and he could wait for the perfect set-up and not force the trade. Now before anyone gets worried, the CL is too much of a wild pony for me at this stage but I got his point.
a few years ago i tried trading ZB and ZN on tick charts. this was before they changed something on the ZB (which i have since forgotten). i found that the action on the ZN was much more prone to fluctuate/run than ZB, which reminded me of watching paint dry.
my broker offered me much better commissions compared to the ES, which was a positive for the ZN. in addition, the tick-value for ZN is 15.625 (1 / 64) compared to the ES which is 12.50. so 3t on the ZN was 4t on the ES. that worked well for the scalping system i was trading at the time.