TRADING TIPS

Why You Want to Look at These Now

Hubert Senters here. Let’s take a look at the 30-year bond. This is interest rate futures contract. It’s a future just like anything else. When I talk to you about bonds I’m not talking about like a CD or something that you grandma or grandpa would invest in. This is an interest rate futures. So what that means is overtime it’s got an inverse relationship to the interest rate yield. Sounds really complicated. Sounds like I am really smart over here. I’m really not. This is how this works in layman’s terms. As interest rates go down overtime the bond market will go up. Now, that’s been working for a very long time. Unfortunately, that’s going to seize the work in my opinion because it has an inverse relationship so what’s going to happen now as we begin to raise interest rates in the up direction like this. This market will go down like this. And you can already see it already happening right here. That’s really the fundamentla core of thing that you have to understand on the 30-year bond. And you know doing well they’re not going to keep interest rates down here this low forever. They make even here for another year or two. But they’re already creeping lower as far as the bond futures. So let’s go over here to the daily chart now. And as you can see they are starting to drop like stones and that’s a good thing. Every time this thing drops a point which is 32 ticks. That’s a potential thousand dollars that you can either make or lose depending on which side you’re on. So let’s go through some basics of these things. Number one the symbol is called ZB. I use the a US on Trade Station. But for almost every other platform out there it is forward slash ZB or you got to know the actual contract month. But it’s just ZB. It’s the 30-year bond. Now, let’s talk a little bit about margins. One of the reasons I love trading futures in general is because you can open up a very small account and you can control a very large amount of notional value which is the cash equivalent. So the exchange set the minimums and these numbers will fluctuate based upon volatility. But a 30-year bond you only need $3,375 to hold it overnight. if you want to trade an intraday you can get as low as $300-$1000 per contract intraday margin. Now, here’s the sexy thing about this and the cool thing about it. A lot of you that trade stocks get hit by the pattern day trader rule like you can only do so many trades a week or they shut your account down and won’t let you do anything else. In futures they don’t really care. You can trade a billon times a day as long as you have the money in your account to back it. They don’t care. So you could trade a one lot in and out a hundred times a day and as long as you’re profitable in it and just blow your account out they’re not going to say anything to. And even if you’re not profitable as long as you don’t go upside down in your account. Let’s say you started out with $3,000 you could potentially trade with this equation, three contracts. Just because you can does not mean you should but don’t let you do it. So it’s better for small accounts and they already have built in leverage so you do have to be a little careful because you are controlling quite a bit of a money when these things start floating around. In the 30-year bond right now they have about a point and a half range on them which that means you have the ability to either make or lose about $1,500 a day on the 30-year bond. Mark Helweg is going to be doing a live on core on ”Why This Hedge Fund Manager is Telling Friends and Family to Exit Stocks” right now. Webinar is going to be Saturday, February 27th at 11AM. I will HYPERLINK you to this registration page. Good luck. Hope it helps. See you on the next video. Hubert.

1 Comment

  1. Elbert MALONEY

    If you are using 3 charts, daily-hourly-10 min, to forecast expected move on the daily chart; what’s more important: price above the cloud or direction of movement on the lower time scales. If both are important, how do you rate position versus direction. For example, daily and 10 min above the cloud and hourly is below the cloud, but the price is moving up.

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