Here is a good example of how the market behaves when price reached a trading limit. Here we are looking at Corn after a USDA report. Old crop July went limit down right after the data and pretty much stayed there. New crop December also sold off, but stayed above limit. Now, the exchange spread [...]
Calculating the Hedge Ratio for Aussie Bonds
One thing you need to consider when trading spreads is what we call the hedge ratio. This article and video looks at how to calculate the ratio using DV01s for fixed interest traders.
Trading Luck?
This is an interesting doco on the concept of luck. It seems odd to suggest luck has anything to do with trading, but the two best traders I know have both independently said luck plays a big role. That said, it depends how we look at luck and consider how it can be created. At [...]
Rolling, Rolling, Rolling. Keep Them Bonds Moving.
You’ve heard of Shark Week. Well this is Rolls Week. For the SFE bonds, this is when all the activity moves from the near expiry to the next. In this case, it is moving from Dec into March. On CQG, you should be able to find the calendar spread for the Dec-Mar 3yrs and the [...]
Yes, We Speak in Code
When new to futures or new to specific futures markets, it can be tricky finding the right codes. This guide explains a few things.
What Is The Market Trying To Do?
Here is an email from and response to one of our trainee traders: Hi Mr Bower, I am trying to experiment with how to better tackle trending & choppy markets, and some fading strategies. I’m also trying to trade the more volatile ES. Trying to step out of my comfort zone. Apparently, the usual scalping [...]
Trading The Obvious
In a recent update we looked at a spread trade in Corn, citing the upside move was overdone and the spread had the potential to narrow dramatically. See here. Over the last few weeks, the spread has done exactly that. This illustrates a very interesting point – unexplainable or extreme moves are often followed by [...]
Size Isn’t Everything
I can’t help it. I keep seeing similarities between riding a motor bike and trading. They are everywhere.
Who Says Technicals Do Not Work?
An interesting move in Soybeans last night. The market finished limit down with heavy offers. It looked nothing but bearish. The reopen saw the market trade down 15pts pretty quickly. Then a retrace to cover the gap, resistance at spot on 1669 held and the market fell always again. Classic textbook technicals. Sometimes trading is that simple.
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