When to trade ZB/ZN? - Bonds and Interest Rates Trading

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Fadi's Avatar 

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  #6 (permalink)

A fair question. Absent an answer to either, I'm still a little bit in the dark! I've assumed that the US morning period is best since it seems best for most, if not all, American instruments. Just looking for validation or challenge to that assumption without a lot of trading and tracking performance in different time periods on my own. Wondering how much these products are traded, for instance, in Europe or Asia during their own higher volume periods.

Thanks for your response.

The "best time" is very dependent on your strategy and trading style. For one trader it could be in volatile environment, while for another the complete opposite. Can't really say. I would personally not worry so much about the time of day. If you see a good setup, fitting perfectly the criteria of your strategy, just take it! I would instead avoid initiating a trade around news release, auctions, and so on...

And if you are already in a trade, it is best to evaluate whether you want to exit before that release, or place a disaster stop or use whatever other risk management technique you have defined for yourself.

Successful people will do what unsuccessful people won't or can't do!

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  #19 (permalink)

ZN 1 year of hourly bars

Time CT Average range 00:00:00.000 0,63 01:00:00.000 0,88 02:00:00.000 1,25 03:00:00.000 1,21 04:00:00.000 1,08 05:00:00.000 1,06 06:00:00.000 1,2

07:00:00.000 2,26 08:00:00.000 2,07

09:00:00.000 2,29

10:00:00.000 1,53 11:00:00.000 1,4 12:00:00.000 1,93 13:00:00.000 1,97 14:00:00.000 1,36 15:00:00.000 1,11 16:00:00.000 0,29 17:00:00.000 1,08 18:00:00.000 0,76 19:00:00.000 0,81 21:00:00.000 0,51 22:00:00.000 0,58

23:00:00.000 0,58

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  #30 (permalink)

SilverFut: I really did find this article helpful; it confirmed my understanding of when best to trade. I didn't really see anything that would reliably define US mkt directional bias based on the London close, but honestly, I'm learning to trade without a bias or a predisposition -- just trade what's there, trade what I see. Otherwise I'll be trying to make the market fir my own preconceptions. And I just don't trade as much volume as that might require! Thank you, again. If nothing else, the article helped my wife see that I really am trying to take this seriously. HUGE value in that! In fact, we should all start sending around scholarly articles to leave lying around so our wives can see them!

Best, Mindprobe

Not a problem. Glad it was of use. I've been in the same boat with my partner on several occasions! I'm in the same place as you in regards to getting out of the habit of predisposition. Spent 2 years trading forex and never really got anywhere but picked up bad habits. Switched over to ES Futures and chased all the great (aka Expensive) "indicators" and "systems".

Recently started using the Jigsaw DOM and finally starting to understand and see what moves the market and when. I also got the No BS beginner course and it made a lot of things finally click. (It doesn't teach anything you won't get from sitting for months in front of a DOM and watching but it got what to watch out for into my head quicker I think).

I was sort of getting somewhere trading the ES but I finally switched over to the Treasuries and it just started to pop out at me. I think the slower market fits better with my current skill level.

I've now cut back to trading from a 1 range chart with the Jigsaw DOM + T&S windows beside it. Have a VWAP plotted on the chart as a reference point with 1 set of +/- 4 tick bands plotted. Make sure to sit down and be ready to trade by 7am market time through to 11.30-12. I like to look for longs above VWAP, shorts below but I don't get tied to it. These markets like to run when they start going and its my way to try not keep getting caught the wrong side (Used to be one of my worst habits trying to pick tops and bottoms against momentum.) Other then that, I don't really worry to much what else is going on as the order flow will say exactly what's happening. I check a financial calendar to know when market moving news is coming and stand out of the way for 10-15mins until order depth returns.

No secret indicators, no special system. Just read the Jigsaw DOM.

The DOM is the single best tool I have used. Wish I had found it years ago instead of looking for a "secret indicator/system". I've made more progress in the last 3 months watching the DOM then I have in the previous 3 yrs.

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How do you use the DOM? What size move are you targeting; 2 tics ; 6 tics or 16 tics or?? How long do you hold a trade? I tried both Book map and Jigsaw and found it a distraction. Too much information, then getting sucked into too small a timeframe.

What do you focus on watching the DOM?

How do you use the DOM? - Watch the clips in the

Jigsaw Members area, then just sit and watch the DOM for weeks. It starts to become clearer the more you watch. At first it made NO sense at all to me. I'm still a LONG way from being good at it but the more I watch, the more I start to see. I also bought the "No BS Trading" beginner course. It doesn't teach you anything you wont get yourself from watching the DOM for 12+mths but it sure helped shorten the learning curve for me. 1st time I read and watched it I didn't understand a thing, then went and watched DOM for 1 mth, 2nd time through No BS course and a few things started to click, then back to watching the DOM for 1mth, and so on.

Up to last week I was using a combination of the "No BS" setup and using a 1 range chart as spoken about in the Jigsaw "Stephen Kelly method" talks. Since its been in this slow tight range most of the day, I've switched back to the "No BS" setup.

What size move are you targeting; 2 tics ; 6 tics or 16 tics or??

- Whatever the market will give me on the day. The DOM will show when its running out of momentum. A few weeks ago I was regularly crushing 10-20 tick moves on the ZB at least 2-3 times a week. Since (about?) the 30yr bond sale last week, I've been getting 2-4 tick moves. (And I'm working hard for those). I've really tried to stop looking for "big" moves. I sat down and figured I NEED 4 ticks a day and that is now what I focus on. Once I know I can repeatedly hit this target then its no issue to add more contracts. There are days when I get far more then this but I don't count on having those days, its just cream.

There are STILL days when I loose and I'm finding it easier to identify what is the cause of that now because everything is either a psychological fault with myself (over trading) or I made a mistake reading the DOM (inexperience). I can't "blame" anything else now because I'm not trading % chance of something happening again in the future as in the past. How long do you hold a trade? - Again, the DOM will say when sentiment is turning and/or momentum is running out. It might be in and out within 5 seconds if something changes and its going to go against me. Other times it can be 1-60mins. It ALL depends on what everyone else is doing and what the DOM says. What do you focus on watching the DOM? - Listen to the Jigsaw learning material and follow the process. I didn't at the start and tried to jump straight in using EVERYTHING the Jigsaw DOM has to offer and it IS information overload. If you step back and slowly add in 1 bit after another of information like Jigsaw recommend, your eyes naturally start finding what YOU need to be drawn to when you need it. It takes TIME, just sitting and watching what is happening on the DOM. Its not even a conscious watching, I tried that and was trying to force myself to find this or that but when I stepped back and watched, things start jumping out and grabbing your attention after awhile, then I realized those things were things I had been trying to force find originally. I'm by no means great at it yet. I had been trading ES and using the DOM on that but I just couldn't get my head around it because of how fast it tends to move on the DOM and bounce around over 3+ price levels. I had watched ES for months and never got all the way there in grasping it, it always felt just out of my grasp but then I switched to ZB/ZN and it all started to pop out at me. I could start seeing when direction switched and market participants changed direction, started to see what are pauses and continuations. The slower market works better for my current ability. There are days when I feel like pulling out my own eyeballs because of how slow these markets can be but it means I have the TIME to see what's happening.

As for time frame, if your reading order-flow using the DOM, there is NO time frame. Your at the pure edge of the market. It is the ONLY leading indication of what market participants are going to do in the future as you can see the pending orders in the Depth Of Market. EVERYTHING else, candle stick charts on any time frame, numbers bars, indicators, whatever are ALL historical tracking of what has already happened in the market. The DOM lets you see what's about to happen in the market.

If you haven't read - "A Complete Guide to Volume Price Analysis" by Anna Coulling, grab a eBook copy off amazon or elsewhere (A couple of $). It completely changed my outlook on the markets and sent me off in a completely new direction. It really opened my eyes to volume/order-flow and how it can't be hidden. That finally lead me to using the Jigsaw DOM (after many false paths that were still stuck using historical representations of data) and I wish I had found it years ago because its finally being able to SEE the actual market as it happens and what's building before it happens. I've still got a LONG way to go but I'm finally sitting down and starting to see what's happening, not just trying to make educated guesses based on the % chance that what happened in the past at a certain point might happen again in the future. There is no reason you can't keep using that same method EG- back-testing shows a 78% chance that 4hr candle price will reject from a 30 EMA. Start adding in the DOM and you can SEE which are the 78% of the times it will work and which are the times it will fail.

If you start using the Jigsaw DOM, just give it TIME. Your brain just starts seeing things as they happen that it has watched many times before. That process takes time and is different for everyone. I'm a slow learner and its taken me a good 4 months of watching everyday to start getting it and I'm sure I'll keep learning things for a long time.

Category: Trading

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