Learning When NOT to Trade.
The ZB Futures/30 year bond has been caught within a sideways channel for the past couple weeks.
Yellow box in the photo indicates the choppiness I’m talking about.
A channel it not hard to trade, but it is not what I trade.
I trade the trend, I trade the move.
Not scalping for a couple of ticks on a 32tick day.
Notice the last bar within the yellow box. The breakdown on Thursday.
It broke well below the previous weeks resistance levels. A two point (64+ tick) breakdown day.
We may be seeing the beginning a bearish trend on the Daily chart in the coming days.
Can we profit from this?!
This Is Today’s Trade Setup
If the 30 year can trade below today’s open and overnight lows then I will take a short position on a slight retracement based on Fibonacci.
BE CAUTIOUS!
Here is why:
- The Bonds have been choppy for the past two weeks.
- There is not enough momentum or catalyst to create a guarantied downward move today.
- It is a Friday, don’t risk to much and spend a weekend with a hole in your pockets.
- It is the end of month. Not much volatility.
- Big money floor traders taking early weekend on Friday. Not much afternoon action. Trade early.
How Our Trade Worked Out
The Bonds did not break down by 11:30am ET. Because it is a Friday the rest of the day’s trading does not matter to me.
For one, the big money traders probably went home already for the weekend.
And as you know, I still have my current job, a kitchen to run, so now off to work!
Do Not Trade When:
- The market is not trending or moving significantly.
- The market does not follow your plan.
- It is later in the afternoon on a Friday.
Lets watch the ZB closely next week. We may still be beginning to see a breakdown trend.
All good advice to help you trade better and pass your TopStepTrader Combine