3 weeks completed! I have felt near collapse during the week. I sleep 4.30am to 6.30am and the spread trades from 7am to 4.30am, so I have been giving it everything. I generally find a couple of half hour naps during the day when things are quiet and prices are not near any of my levels. Typically there has been a lot of waiting and actually only about 7 trades a day.
The first week was good, as non farms was really good to me. The second week I stopped out for a big loss in one of my trades and was pleased to end up break even after costs (+$20 AUD). The 3rd week was the craziest, an excellent Monday +$650 and profits slowly reached to about $1000 on 1am on Thursday. Then the spread collapsed fast and I stopped out for a $855 loss and didn't do anything else until after 2 hours sleep when the market was shut. The spread opened up about half the way back to where it fell the night before, it looked like a buy still but I would rather waste a day just to see how unsettled the market is. The Australian 10 year dropped again causing the spread to blow down further... I bought virtually the low of the drop and held if for over 1 tick. I waited before selling it and was quick to get in and out as the spread is really low on the year. I soon rolled into Friday and after the US job reports the spread was pushing up more, I waited 2.7 ticks before selling, which is tough to do because at that point it had pushed up 6 ticks from the drop the day before which is a big move for this spread. I recognized the need to adapt and instead of selling the spread 0.5 to 0.8 ticks I waited over 1 tick before selling it again. I was able to get the second sell off for a profit. I had sold the spread the second time when the US Treasury Note had fallen (puked) for a second time. Often when a market is pushing in a direction for a long time, eventually there is a quick spike further typically just before any kind of retrace. Due to the fact many traders just cannot hold it this far, scalpers will be getting out, and I guess as the markets moves further, longer term trades now are more likely to be exiting too... a series of people unwilling to take the current price, this is situation which can lead to a great sense of panic as people try and exit a price is taken fast and it has a quick domino's affect, the stops of traders are activated as traders exit which leads more traders to need to exit, buyers on the bid pull their orders in panic they will be smashed through.. people just hit sell because the prices are slipping so fast they panic if they have a position against the move. This is what I waited for to sell the spread for the second time. As I saw it accelerate, I waited for a split second pause I sold the Australian bond which is slow to react and que to buy the T note as the momentum is turning, it goes through me a little then bounces strongly and I don't stick in the position long because I try not to have too much size on in these conditions. I sell the same price again later and it pushes further over the next hour... I see the T note with regards to elliot wave analysis has done 4 out of 5 waves. If you believe this, which basically says a downward move, moves in 5 stages, down a lot, up a bit, down a lot and then up a bit and then the final wave down, which is typically the biggest. The T note free falls, and my screen is jolty from the huge amount of trades going through.. the market rips downwards. It lasts about 10 seconds and in this time I establish where I go to click buy on the T note is about where I should be taking my stop. I click buy and sell the Australian Bond to enter the spread and get ready to get out the T note if it goes past where it just bounced, I bought 2 prices away from where it bounced and it continued to retrace. I was able to get my 2nd and 3rd sell in the spread off for a profit, took a loss on the first one, got back in the spread as it headed towards the high. I thought it's unlikely to reach the high because it's pushed a little further from people stopping out in the market and it looked like the final unloading of long positions, so when the spread headed a little bit back I sold it and got out too early the next morning as it retraced back to where it was before the US job report. Which I think is because the Australian Bond and US T notes do the most volume at different hours of the day so I thought when the Australian Bond reopened it would be likely to have selling pressure, but this took 4 hours of slowly coming down and it was just too tough to wait it out as the spread had retraced a fair bit and didn't wanna have short positions from this price if it tested the highs.
When the spread came down to these levels I remembered various prices from the last couple of weeks. I felt like I had a great picture of the past in my head, I could recall action at these prices before, and remembered the support offered at this price where a trader now had an iceberg (which is a large order, but the traders shows a small amount and when that is filled replaces the small amount until his large position is filled) The T note had found a range a little above the low and waited for it to extend to the favorable side of the range and bought just above the iceberg and entered the T note. It was a great price and pretty much the low of the downward move on the spread, it spent the rest of the day on Friday going up, near the high. In total the range from Thursday to Friday was 9 ticks, a huge range. 2.3 ticks can be enough to stop me out from when I enter the spread. I profited really well from it and reclaimed my $1000 net profit for the week, I ran my profits a little further, which was extremely tough. Imagine the spread has been going 5 ticks in one direction, normally the daily range is 2-4 ticks, you have waited 5 ticks and you sell, it retraces half a tick, which it was yet to do at any point during the 5 tick move you watched and waited through. You don't wanna miss profits in case it's one of these moves which retrace a small amount when they do... but you know you can be aggressive when you sell it for the 2nd time to take profits quickly so for now you should try and capture this overextended spread by holding it and making your risk to reward a better ratio. It's mentally very tough as the retrace you want to capture can take 2 hours where you will seem profits slip back and forth but I managed to hold my first clips longer than usual. I was aggressive with 2nd and 3rd clips to try and scalp the bid and offers aggressively though.
What a week, felt nice to just sleep 8 hours.
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