3 month eurodollars

General discussions about futures.
Post Reply
Spectre
Roundtable Knight
Roundtable Knight
Posts: 136
Joined: Sat Mar 03, 2007 9:04 pm

3 month eurodollars

Post by Spectre » Fri Mar 23, 2007 6:56 pm

downward trend.

Spectre
Roundtable Knight
Roundtable Knight
Posts: 136
Joined: Sat Mar 03, 2007 9:04 pm

Post by Spectre » Sat Apr 07, 2007 5:35 pm

chart
Attachments
3Meurodollar.JPG
3Meurodollar.JPG (117.99 KiB) Viewed 7398 times

AFJ Garner
Roundtable Knight
Roundtable Knight
Posts: 2040
Joined: Fri Apr 25, 2003 3:33 pm
Location: London
Contact:

Post by AFJ Garner » Sun Apr 08, 2007 1:29 am

Some longer term players will have been short 3 month Eurodollars for well over two years.

Perhaps you might like to expand your rather brief comments on this and the other charts you have recently been posting.

What and how are you trading? Are you a discretionary trader or a systematic one? Are you telling us that you are short Eurodollars or that you are about to be? Or are you telling forum participants that they should short Eurodollars? Or are you saying the trend is about to reverse and that you are going long and so should we?

Tell us a little more about your strategy, your thoughts on these markets, these charts.

Spectre
Roundtable Knight
Roundtable Knight
Posts: 136
Joined: Sat Mar 03, 2007 9:04 pm

Post by Spectre » Sun Apr 08, 2007 11:50 am

I try to figure out the personality of the market, looking at all the different timeframes. Some markets can be boring and yet have stability in the sentiment/trend. Others can be volatile, and even though your correct in your directional bias, the market can throw you off like a rodeo bull.

I don't advise anyone on what to do, and in order to advise anyone about futures, you need to be registered with the NFA/CFTC in regards to futures markets.

I guess more so the charts are for trying to figure out the trend on a longterm basis.

Every market has a

1) day range (dollar volatility on a single contract basis)
2) week range
3) months range
4) years range

The smallest position anyone can take in the market is 1 single contract for that derivative. When you enter that market you expose yourself to the volatility of the market. You can think of the derivatives price action as the ocean and your position as the ship.

Now your daily dollar fluctuation will swing your account equity, by a certain percentage day to day. Whether that oscillation has a positive deflection or a negative deflection is a product of the number of contracts in relation to the account equity size and direction of the market.

If your entry is good your account equity should have minimal negative deflections over time in the days following trade placement. If your position is underwater the days following and rarely surfaces to positive territory then it means your entry is off. And a countertrend volatility spike is the only thing that can save it. But this is wishing.

To minimize risk the daily/weekly/monthly oscillations against the longterm trend is one way to enter the market, the longer term the oscillation the risk is implied to be less. And this is what I'm trying to look at for each market. Trying to figure out the volatility ranges/waves for each market. The risk is there also that the oscillation could represent a significant change in the trend of the market. But if you find this out by losing money on those trades, then that money lost has yielded more informational value of that market.

And thats basically what I try to do. Try to subject the account equity to a certain amount of volatility for a few days to wait for a breakout where the longer term trend is reaffirmed or a new trend starts.

I might have rehashed some basic stuff.

Chris

AFJ Garner
Roundtable Knight
Roundtable Knight
Posts: 2040
Joined: Fri Apr 25, 2003 3:33 pm
Location: London
Contact:

Post by AFJ Garner » Mon Apr 09, 2007 4:44 am

Chris
Do you backtest as well as visually inspect the charts? To the extent that there are "answers" to such questions as you raise (and those "answers" seem to change year by year as markets evolve) I have found thorough mechancial backtesting an important aide to my learning curve and my evolving thought process.

Spectre
Roundtable Knight
Roundtable Knight
Posts: 136
Joined: Sat Mar 03, 2007 9:04 pm

Post by Spectre » Mon Apr 09, 2007 5:08 pm

mostly visual, I think a key aspect is how much harm a market is able to do to a position based on past history.

If a market has stable oscillations and risk can be quantified, and that quantification of risk has a inherent trend, then its safer then another market where periodic oscillations are all over the place.

there is a structure to price movements, since price movements are a aggregate of common market participants to that market. So if you can quantify what the market has done in its gyrations then picking points of entry with the trend is easier.

why would the market countertrend if the trend is so obvious? Markets seem susceptible to large order flow from different parties who have different reasons for participating in that market.

a glancing blow to a market is much easier for position entry in terms of risk reward I have found..
Attachments
10yearmetastock.JPG
10yearmetastock.JPG (127.61 KiB) Viewed 7268 times

Spectre
Roundtable Knight
Roundtable Knight
Posts: 136
Joined: Sat Mar 03, 2007 9:04 pm

Post by Spectre » Mon Apr 09, 2007 5:19 pm

if you look at the chart above, you would think that bond yields would have to drop and price heads higher.

but looking at a multiyear chart, it would seem to indicate a multiyear long term bear market in bonds has started.

http://finance.yahoo.com/q/bc?s=%5ETNX& ... z=l&q=l&c=

so the support levels in the bond market are implied to break at some point.

the safest way would seem to be to let it oscillate back to 4.50% but latest data seems to indicate the economy is stronger then people think. And 10 year notes are at 4.75%, its been a range trade between 4.4-4.8.. for a few months now.

the bond bulls are looking for a slowing economy, but the data wont surface. And just when the yield looks like it will break 4.8% and head higer, the market pounces on weak data.

AFJ Garner
Roundtable Knight
Roundtable Knight
Posts: 2040
Joined: Fri Apr 25, 2003 3:33 pm
Location: London
Contact:

Post by AFJ Garner » Tue Apr 10, 2007 2:21 am

I think a key aspect is how much harm a market is able to do to a position based on past history
You have hit here upon the major reason why some folk believe backtesting may have its uses. Not that past performance is everything but it is all we have got. Died in the wool backtesters believe that if they can describe their thoughts, their ideas of market behaviour, in terms which can be described in computer code then they can set the computer trundling away to see whether those ideas would have made or lost money in the past.

Backtesting is not an idea limited to fuddy duddy old long term sit on a position for months or years trend follower mugs like some of us on this form.

I am told it is what quants at the better hedge funds do all day long. Test out their ideas using computer code. Whether those ideas relate to short term arbitrage, CB trading, options or whatever.

AFJ Garner
Roundtable Knight
Roundtable Knight
Posts: 2040
Joined: Fri Apr 25, 2003 3:33 pm
Location: London
Contact:

Post by AFJ Garner » Tue Apr 10, 2007 4:33 am

Having said all that a Wizard told me that his most publicised triumph had been achieved through disretionary trading rather than systematic.

So there you go. Room for us all.

Spectre
Roundtable Knight
Roundtable Knight
Posts: 136
Joined: Sat Mar 03, 2007 9:04 pm

Post by Spectre » Tue Apr 10, 2007 7:54 pm

what seems to be clearly evident is that the commodity markets have benefited from devaluation in the dollar. With US fiscal policy painting a bearish picture for the future.

the other major trends seem to be environmental in nature. I was watching al gores inconvenient truth, and the data seems to indicate that resource scarcity will get even worse. With modernization of the third world creating new needs.

multidecade trends seem to be inflationary in nature.

Spectre
Roundtable Knight
Roundtable Knight
Posts: 136
Joined: Sat Mar 03, 2007 9:04 pm

Post by Spectre » Tue Apr 17, 2007 2:26 pm

http://futures.tradingcharts.com/intraday/NO/67

10 year notes bounced off the trendy at 107

Post Reply