Swing Trade Idea: TBT

Bonds are starting to move. Long term rates are creeping higher and bonds prices are reacting like they should (falling). I've been nibbling on TBT for a few months now and it seems like this trade is about to start moving.

As you can see from the chart below, TBT has been consolidating in a long wedge formation and is beginning to break out. One thing that jumps out at me right now is the huge volume that was traded on Thursday and Friday of last week. Here's the chart:Gameplan:

• Initial Entry Price--49.25
  
• Initial Stop Loss--46.00
• Initial Profit Target--60.00--sell 2/3 position
  
• Second Profit Target--75.00--exit rest of posisition
• Trailing Stop--once TBT closes above 55, the stop loss will be moved to 49.00 and the entire position will be closed out if TBT closes below an ATR Trailing Stop set for 20 periods with a 3.0 multiplier.
  

There you have it, the full game plan. Now we just need to put the trade on (I'm gonna add a fresh position to what I already have and manage the entire position with the above plan). Let's take a quick look at the risk to reward. With the 49.25 entry, the risk will be $3.25 with a potential reward of $10.75...a 3.30 R-multiple. This is good enough to put on the trade. Remember, the 60 target is the target for the first 2/3 and the remaining portion will be trailed up to 75, which means the trade could return more, but the intial targets are good for intially determining if the trade is worthwhile.

The scenario is built, the game plan is written out, and the risk-to-reward has been qualified as worthwhile to put capital to risk for...now I've just got to put it on and manage it. Easy right? Trading can be easy when you take those steps to plan a trade and then FOLLOW YOUR PLAN.

I'll write some follow-up posts to udpate on the progress on this trade.

TLT