Beginner level bond questions - Bonds and Interest Rates Trading | futures io social day trading
futures io futures trading


Beginner level bond questions
Updated: Views / Replies:2,723 / 11
Created: by toshiro Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Beginner level bond questions

  #1 (permalink)
Trading Apprentice
London UK
 
Futures Experience: Beginner
Platform: online
Favorite Futures: forex
 
Posts: 5 since Feb 2013
Thanks: 3 given, 5 received

Beginner level bond questions

hello,

I am trading in others fields than bonds and I am as such totally at beginner level in this field. I never traded some so far and miss the practical aspect very much. I read a lot on them, but there are a few questions I haven't find an answer so far.

- do bonds i.e. interest rates fluctuate like stocks?

- if bonds "only" fluctuate when e.g. central banks are releasing the new interest rates, or when moddy's & co are noting a company, wouldn't that make bond trading somehow borrying? i.e. with only a few monitoring & trades at these times of the year?

- does it make sense to buy a bond before the coupon payment and to sell it again just after to cash in the coupon?

- for a given bond (may be you ask which one as there are different classes - let's take a T-bill or a muni or anything you want), how can you see the date of the next coupon payment?

thanks

Reply With Quote
The following user says Thank You to toshiro for this post:
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Elite Member
Oberhausen, Germany
 
Futures Experience: Advanced
Platform: Sierracharts
Broker/Data: Interactive Brokers/DTN IQFeed
Favorite Futures: Bund Future
 
Posts: 278 since Aug 2011
Thanks: 100 given, 310 received



toshiro View Post
hello,

I am trading in others fields than bonds and I am as such totally at beginner level in this field. I never traded some so far and miss the practical aspect very much. I read a lot on them, but there are a few questions I haven't find an answer so far.

- do bonds i.e. interest rates fluctuate like stocks?

There are markets for bonds just like for stocks. Called cash markets, don't confuse with with bond futures and their markets. Prices are influenced by demand and supply, stupid remarks from central bankers and so on.


toshiro View Post
- if bonds "only" fluctuate when e.g. central banks are releasing the new interest rates, or when moddy's & co are noting a company, wouldn't that make bond trading somehow borrying? i.e. with only a few monitoring & trades at these times of the year?

Companies may sell bonds too, called corporate bonds, but these are very different from the Notes/Bonds sold by governments.


toshiro View Post
- does it make sense to buy a bond before the coupon payment and to sell it again just after to cash in the coupon?

Nice idea, that's how we all make money...NOT. When you buy a bond you will have to pay the seller the amount of interest due up to the purchase date. Though you will get the complete amount of interest when the coupon is due, you effectively get only the amount from the date of your purchase to the coupon date.

toshiro View Post
- for a given bond (may be you ask which one as there are different classes - let's take a T-bill or a muni or anything you want), how can you see the date of the next coupon payment?

thanks

The issuer will tell you.

Reply With Quote
The following 3 users say Thank You to FGBL07 for this post:
 
  #4 (permalink)
Trading Apprentice
London UK
 
Futures Experience: Beginner
Platform: online
Favorite Futures: forex
 
Posts: 5 since Feb 2013
Thanks: 3 given, 5 received

Thank you for your reply.


FGBL07 View Post
There are markets for bonds just like for stocks. Called cash markets, don't confuse with with bond futures and their markets. Prices are influenced by demand and supply, stupid remarks from central bankers and so on.

May be to be more concrete (as you write to trade with interactive brokesr), how can you see those cash markets for bonds in interactive borkers' tool?



Quoting 
Companies may sell bonds too, called corporate bonds, but these are very different from the Notes/Bonds sold by governments.




Quoting 
Nice idea, that's how we all make money...NOT. When you buy a bond you will have to pay the seller the amount of interest due up to the purchase date. Though you will get the complete amount of interest when the coupon is due, you effectively get only the amount from the date of your purchase to the coupon date.

I did monitor one t-bill to see a little how it reacts over the time. But nothing really happened, the price remained the same. Does that mean that for a regular income, you would choose a t-bil e.g. and for a more dynamic bond to trade like stocks, you would use one bond in the cash market?



Quoting 
The issuer will tell you.

Where can you find this information? Can you do that in the tool of interactive b.?

Reply With Quote
The following user says Thank You to toshiro for this post:
 
  #5 (permalink)
Elite Member
Oberhausen, Germany
 
Futures Experience: Advanced
Platform: Sierracharts
Broker/Data: Interactive Brokers/DTN IQFeed
Favorite Futures: Bund Future
 
Posts: 278 since Aug 2011
Thanks: 100 given, 310 received


toshiro View Post
Thank you for your reply.



May be to be more concrete (as you write to trade with interactive brokesr), how can you see those cash markets for bonds in interactive borkers' tool?

Right-click an empty line in the TWS grid, select "Treasury Bond selector". Also take a look at their website: http://www.interactivebrokers.com/en/index.php?f=products&p=bond


Quoting 
I did monitor one t-bill to see a little how it reacts over the time. But nothing really happened, the price remained the same. Does that mean that for a regular income, you would choose a t-bil e.g. and for a more dynamic bond to trade like stocks, you would use one bond in the cash market?

The sensitivity of a Note/Bond to changes depends upon its duration. Please look up bond duration in Wikipedia. I do not want to copy the article.

Quoting 
Where can you find this information? Can you do that in the tool of interactive b.?

I don't know

Reply With Quote
The following 3 users say Thank You to FGBL07 for this post:
 
  #6 (permalink)
Trading Apprentice
London UK
 
Futures Experience: Beginner
Platform: online
Favorite Futures: forex
 
Posts: 5 since Feb 2013
Thanks: 3 given, 5 received

ok, so practically how would you trade bonds? is it so immediate like stocks and it moove each day or do you wait 1x a month for the interest rates to change and you take a bet on these changes and the rest of the time, you have "nothing" to do?

Reply With Quote
The following user says Thank You to toshiro for this post:
 
  #7 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,238 since Jun 2009
Thanks: 29,350 given, 83,220 received

@toshiro, please use the Thanks button when someone answers your question.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
The following 3 users say Thank You to Big Mike for this post:
 
  #8 (permalink)
Trading Apprentice
London UK
 
Futures Experience: Beginner
Platform: online
Favorite Futures: forex
 
Posts: 5 since Feb 2013
Thanks: 3 given, 5 received

a feature I didn't know about!


Last edited by toshiro; February 14th, 2013 at 09:40 AM.
Reply With Quote
The following 2 users say Thank You to toshiro for this post:
 
  #9 (permalink)
Elite Member
Oberhausen, Germany
 
Futures Experience: Advanced
Platform: Sierracharts
Broker/Data: Interactive Brokers/DTN IQFeed
Favorite Futures: Bund Future
 
Posts: 278 since Aug 2011
Thanks: 100 given, 310 received


toshiro View Post
ok, so practically how would you trade bonds? is it so immediate like stocks and it moove each day or do you wait 1x a month for the interest rates to change and you take a bet on these changes and the rest of the time, you have "nothing" to do?

Why do you want to trade bonds? Usually you invest in bonds to earn the interest. Not much these days. And I'd be reluctant to invest now, rates will go up. But nobody knows when.

To really trade bonds you need access to a bond market. Eurex bond market has a minimum order size of 1 mio €. One bond will cost you about 145k € for a notional value of 100k €. German 10-Yr are available in sizes down to 100 €. But these sizes are suitable for investing only. I do not know the minimum size for the markets offered by IB for US treasuries, please lookup at their website.

Poor men's alternative to trading bonds is trading bond futures. But since you label yourself as beginner I strictly advice against it.

If you want to ignore my advice start with Schatz (Future on 2-Yr Notes). Overnight margin is 500 € with IB, one tick is worth 5 € and it moves slowly. Just be careful.

Reply With Quote
The following 2 users say Thank You to FGBL07 for this post:
 
  #10 (permalink)
Trading Apprentice
Bogota
 
Futures Experience: Intermediate
Platform: several
Favorite Futures: String Bass
 
Nikopol's Avatar
 
Posts: 13 since Aug 2012
Thanks: 3 given, 4 received


And be careful, If interest rates go up, your bond will loss money, maybe you have studied a little bit since your first inquire and now you now about the accrued interest and the price/yield relationship. (as interest rates and Investors capital flowing can move a lot bond markets, there are times where bonds can generate returns similar to those expected in stocks, but keep in mind commissions, fees fees banks....)


Last edited by Nikopol; August 1st, 2013 at 04:50 PM.
Reply With Quote
The following user says Thank You to Nikopol for this post:

Reply



futures io > > > > Beginner level bond questions

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Time and Sales - Level I - Level II - tick data trendisyourfriend Traders Hideout 4 August 28th, 2014 01:14 AM
Beginner's question Raceman Beginners and Introductions 19 October 22nd, 2011 05:08 PM
Need Level II and Level I realtime or historical data ptd26 Reviews of Brokers and Data Feeds 5 March 26th, 2010 04:27 PM
Just2Trade Level I and Level II Quote Quality? ptd26 Reviews of Brokers and Data Feeds 1 February 10th, 2010 08:15 PM
Coding for beginner max-td NinjaTrader Programming 8 July 21st, 2009 07:42 AM


All times are GMT -4. The time now is 04:16 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-12 in 0.13 seconds with 19 queries on phoenix via your IP 54.163.210.170