How bond traders use charts: without being technical analysts

Did you know that there are an awful lot of market professionals out there who are not technical analysts – yet they use charts all the time. As a technical analyst you might well believe that you have little to learn from them; wrong, of course. First and foremost, if you want to work in a dealing room you must understand the way others work; only then can you out-fox them. Whether it’s with ingenuity, new techniques or whatever, the ability to get under their skin and pre-empt their next step gives one a great edge. It also makes for a far more cooperative environment.

This week macro rates expert (covering bonds, swaps, futures and options on interest rates) at Mako Financial Keith Grindlay wrote a macro piece about the US interest rate outlook. He compared it to the last time the Fed put up the repo rate – which was as long ago as 1994. Using his preferred charts he explains his thinking.
Look at the ones he’s using, and what a long term time horizon is involved; I think you will agree that this is probably surprising. While using very simple charts – and what exactly is wrong with that? – he also notes the increased appreciation of what these can offer.

‘There are still those who want to compare 2015 rate hikes with 1994. As Macro Thoughts has highlighted already this year, the move by the Fed in 1994 was seen as a shock, though technical analysis should have warned traders not to be long and markets today are better aware of technical analysis.’

What is also very evident in this his weekly piece is the breadth of knowledge required, the historical context, and the insight needed to see disparate pieces of the puzzle and explain how they are connected. A little something for everyone here, I think.

Please click on the following link to read the whole report Macro Thoughts August 2015

 

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The views and opinions expressed on the STA’s blog do not necessarily represent those of the Society of Technical Analysts (the “STA”), or of any officer, director or member of the STA.

The STA makes no representations as to the accuracy, completeness, or reliability of any information on the blog or found by following any link on blog, and none of the STA, STA Administrative Services or any current or past executive board members are liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use.

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About Nicole Elliott

Nicole Elliott

A graduate of the London School of Economics and Political Science (BSc Social Psychology) Nicole Elliott has worked in banks in the City of London for the last 30 years. Whether in sales, trading or forecasting technical analysis has always been the bedrock of her thinking. Key expertise lies within all areas of treasury: foreign exchange, money markets, fixed income and commodities.

She has also added to the body of knowledge of the industry writing the first western book on Ichimoku Cloud Charts. Strong media links and a cult following are due to her prescient calls on the markets and often entertaining format.

Nicole can be contacted at trending@sta-uk.org

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