Hubert Senters here.
In yesterday’s video we were talking about the power of trading, 10-year note. And I told you that the intraday or margin low $1250. And this says $1490. This is from an old slide. They modify the margins depending on how volatile the contract is. I didn’t feel like changing that to $1250.
So we know that it doesn’t require a lot of money to trade these bad boys like if this is the margin that set by the exchange
A lot of your brokers will let you trade one contract for anywhere from $300 to $500 per contract. Or they may even go up to the actual minimums or they’ll go over the minimums. So you already know that. So the next thing you probably want to know is there any advantage. Yes. There is.
So the time that you can trade bonds is they open up at 6PM EST and they close the very next day at 5PM EST. So that doesn’t mean they are only open for an hour. That means they’re open for 24 hours. Now, the cool thing about that is this is why they’re better than stocks. They only have 60 minutes for a potential gap.
So really your only exposure to a potential gap up or gap down is for 60 minutes. Unlike stocks they close at 4:00 or 4:15 or 4:30 depending on what you’re trading. And then they open up the next day at 9:30. You got the whole lot of crazy stuff that can happen overnight.
And for the most part bonds don’t really gap up or gap down. Now, there are rare cases where it can and will happen. But it’s usually from the Friday close to the Sunday evening open because they’re going to close on Friday evening then they’re going to open back up at 6PM on Sunday.
So you got that risk but as long as you don’t want to hold anything over the weekend you can trade them overnight and enjoy your profits just marinating in the volatility. Let me show you really quick. So this is the 5-minute chart of the 10-year note.
And as you can see so it closed at 5PM and then it opened right back up 6PM. I’m going to zoom in there so you can see that.
That there’s no real gap to speak up. Now, doesn’t mean it will never happen because they are the financial market and crazy stuff happens from time to time.
But for the most part 90 percent of the time you don’t have to worry about any gaps. It’s probably closer to 95 percent. You can see it closed right here. It closed right there. And then it opened the very next hour right there. So you experienced exactly one tick of gap.
And that tick right there is only worth $15. So worst case scenario you were long right here at the close. And you were hoping it would immediately go higher and you were wrong you would have lost $15 on that trade. Now, on the other hand if you were short from up here you would have made $15. And I’m going to cover what that looks like in the next video.
Steven Brooks is going to be doing a special webinar on ”How to Win On Up to 82.46% of your Trades By Following a Trading GPS.” This webinar is going to take place Tuesday at 7PM EST. I will HYPERLINK you to the registration page.
Good luck. Hope it helps. See you on the next video.
Hubert.
