Futures Trading For Beginners – How to Trade Futures Using Implied Volatility Bands

Futures Trading For Beginners – How to Trade Futures Using Implied Volatility Bands

A Look at How We Trade Bonds

It’s Jonathan, owner of Masters in Trading. Let me walk you through how we trade bonds. And, this is the exact trade that Pablo was able to take out $8,000 per week when he started trading with me back in 2017. At the end of this post, I'll leave some additional content that walks you through exactly how Pablo was able to reach those goals.

We're just looking at the ZB contract, which is a 30-year future, and the UB contract. This is the ultra bond. It’s very, very liquid. These things can really move. For those out there that think that bonds don't move, you're kidding yourself.

Let me explain how we teach this trade. These are just cycles that are broken up by weeks. So each one of these weeks is a brand new game. So, after this week, it starts at zero. The trades, after the week, it starts at zero and so forth. These are cycles. We can look at these in weekly, monthly, options expiration cycles, annual cycles, but we start with just basic weekly cycles.

Keeping an Eye on Implied Volatility Band Indicators

Because there's a learning curve, I wanted to take you to our futures discord room that Pablo and myself are in helping every day.

So going back to October 6th. And what Pablo's referring to is how these contracts bounce off their implied volatility bands. Implied volatility bands is the expected move for the options. You don't need to know options to understand this, but just realize that the Greeks, the Gamma and the Delta, are really kicking in around applied volatility bands so they're going to act as your first line of support or first line of resistance.

And if you look at this chart, going back, sell, boom, gets right back up here. Sell, it comes off. Right back up here. Sell, bounces, and then end of the week sells right back down. It bounces, bounces. Here, it sells off, but look what it does right going into the next week. These are reliable bands. It's the simplest way for us to teach and start getting you comfortable with the bond trade.

Need I say more? Michael jumps in, doubled my weekly goal and hit it this morning. Awesome. Happy for you. It's been six weeks in a row. Respecting my goal more than my greed. Wanting to see a bigger number has really helped. And then we walk people through, just kind of mindset.

October 7th, Pablo jumps in. We just got a nice pull back to the weekly bands. If you're trading this week to week approach using the midweek turnaround tactic or whatever you want to call it, he's just referring to how he took $8k out per week when he started trading with us, this would be a good time to add, if you're currently opening a new position or if you opened a position earlier this week and took profits on it already. If you're not involved with real money, consider paper trading this approach to see how it fits. Everybody should be paper trading. It's incredible nowadays that we can learn without risking any money. This is how I started trading bonds. Just sharing the approach that I use and the trade I use to be specific when starting out for your benefit. Clients asking questions, all learning together.

Pablo giving feedback about how charts are set up. We hold two futures classes every week. Actually, we hold one futures class every Friday, and then every other Wednesday, we hold a futures class and every other Wednesday we hold an options class. So this was covered in our classes. Now Pablo adds, for those of you following the trade, last week we had a good turnaround, but the repeat failed by weekend. Of importance, notice the direction from the very start of the following week. In favor of the trade direction, we would be in had we opened on Friday and didn't close. And then we give current profit targets, how to do this trade.

And then today is October 13th. All right. We've got them where we want them. The 157 puts I was looking at yesterday are currently trading 14 cent bid at 15, high of 22, low of 13. And then Pablo walks everyone through the trade. Challenges the room with a question. This is how we learn. This is more important to us to get people to jump in and answer these questions. Here's Matt. Matt's been with me for a while. Come on, newer folks. Jump in here and guess. This is how we learn. We're all learning together.

Now, this futures trade, it's an awesome trade, but there is a learning curve. That's why, for our members, we have six futures classes every single month and then we have the discord room to walk people through the trade. If I go to the beaker right here, I just want to expand it to show you how it looks on the monthly cycle. Okay. Apply. Okay. Now, same kind of rules, except we're just looking at it from a monthly cycle as opposed to a week. So let me put it on 90 days. Put it on two hours. And here's what it looks on 90 days.

Now remember, because these cycles are now on monthly, it's not just a week. It's a month. You can see here, it trades right up to the bands, has trouble, gets right by them, has trouble and then sells off. This is a low vol period. Here's the expected move. But notice how those bonds just stay low vol here, gets to the bottom, rallies up and now it's kind of no man's land. So we watch the weekly cycles, we watch the monthly cycles and then we go out and watch the annual cycles as well.

Now what I'll do, in the video description, I'm going to leave the video where Pablo walks you through exactly how he was able to take out $8,000 per week to get started. My name is Jonathan Rose, owner, Masters in Trading.


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