Trading treasuries... what do I need to know? - Bonds and Interest Rates Trading | futures io social day trading
futures io futures trading


Trading treasuries... what do I need to know?
Updated: Views / Replies:1,063 / 3
Created: by josh 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
 

Trading treasuries... what do I need to know?

  #1 (permalink)
Elite Member
Georgia, US
 
Futures Experience: None
Platform: Various
Favorite Futures: Various
 
josh's Avatar
 
Posts: 4,897 since Jan 2011
Thanks: 5,143 given, 11,242 received

Trading treasuries... what do I need to know?

I have been watching the 10 year and 30 year off and on for a while, trying to really "figure out" the bond market, but only in the sense of how it "works" and correlates with the equities market. I have only ever taken one bond trade, and never traded notes.

In my very limited perspective of these (and all) markets, I see commodities, particularly metals/energy, as the "fast lane, reckless youngster" of the markets; I see equity indexes as the "more grown up but still a wild side"; and I envision treasuries as the "sage, wise, mature" market that shakes its head at the others in disbelief at how skittish and immature they can be. I suppose currencies are really the "I am the omnipotent being" markets, but I'm not going there at the moment.

I was inspired to write this by @PandaWarrior, who just mentioned he has been toying with notes recently. And further inspired by @tigertrader, who described an trade from earlier today in the bonds. And also inspired by @addchild, who, from my perspective, seems to be Mr. Bond (or maybe he's Mr. Note).

My questions, in no particular order:

1) Am I crazy for becoming interested in treasuries when so many other traders are interested only in the sexy (gold, oil) but bipolar products?

2) I moved from oil to S&Ps about 2 years ago. I will be an S&P trader forever. But will adding treasuries be a useful endeavor for someone like me, in your opinion?

3) One of the first things I noticed about bonds is that there is not as clear a delineation between pit hours and non-pit hours, as far as the volume goes. For example, here is ES:

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Pretty clear pattern. Every day at 9:30am ET the volume comes in, without fail, under normal trading conditions. But here is the 10 year:

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


There is a much more gradual advance in volume from around midnight. It does not seem that the 7:20 - 14:00 CT bond pit hours are as "respected" as the equities hours are in the ES. So, I am not sure as how best to define a "day" at this point.

4) Bonds or notes -- if trading outright, which do you go with? Notes has more volume, but that's really a non-issue in my case. And, do most treasury traders even trade outright, or are most of them spreading?

5) Clearly treasuries respond to much of the same economic data that the ES does. However, I know I need to be aware of auction results, such as the bid-to-cover ratio of the auction, rate, etc. But what else does a treasury trader need to look at that I currently probably am not looking at as an equity index trader?

Thanks for your replies!

Reply With Quote
The following 6 users say Thank You to josh 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
Philly, Pa
 
Futures Experience: Master
Platform: NinjaTrader
Favorite Futures: ES, ZB
 
tigertrader's Avatar
 
Posts: 5,948 since Jul 2010
Thanks: 6,314 given, 31,870 received


Got a few hours or days...

I've been trading them since '82 and I am still learning about them

I recommend reading one of Tony Crecenzi's books or just hang out on PIMCO's site and read some of their white papers.

Then if you have any questions you can direct them to me, if you like.

Reply With Quote
The following 6 users say Thank You to tigertrader for this post:
 
  #4 (permalink)
Trading for Fun
london
 
Futures Experience: None
Platform: various
Favorite Futures: Glockenspiel
 
Posts: 166 since Jan 2012
Thanks: 43 given, 157 received

Here's what you got to do:

1. Ditch your charts (mostly).
2. Learn about the yield curve.

Thats about it.

A bit more info:

Professionals trade the curve. Period. Just like professional commodity traders trade the oil curve, gas curve, etc (seeing as you mention commodities) via spreads, flys, ratios, crack spreads etc. It's pretty rare a successful bond trader will punt an outright.

Retail rates and technology will NOT be prohibitive. I know bank traders who are charged $1.50 commission per side alone (BEFORE exchange fees) to execute electronically through Bloomberg (VERY basic functionality).

It's a very maths driven market, based on macro economic themes. Currencies are probably bigger drivers than equities. Fixed income will drive equities. Equities will rarely impact the FI market.

You're going to have to learn about the whole curve - from OIS market, fed funds, Eurodollars all the way across to the 30 year to really understand a particular part of the curve such as NOB spreads. Sometimes the short end is the driver, sometimes the long end (when you understand that/why, you will get why the inverted yield curve is a precursor to looming disaster for stock investors)

Heres a good free clue as to why that is:
http://stockcharts.com/freecharts/yieldcurve.php


Duration, Cheapest to deliver, DV01 are themes to google. Also Relative Value, Basis, Repo, Swap.

Essentially the idea is to understand how the yield curve is moving with the (daily) news, and the implications of market sentiment will have on the curve. Day trading mispricing in the curve is possible, as is taking longer term views or positions on the curve. The ratios you decide upon will be a big factor of your success.

Try reading The Bond Market by Christina I. Ray. Then you will throw away your charts and realise why TA is such a f*cking bad joke, and how to trade professionally.

Another good free toll for EVERY trader:
http://www.tradingeconomics.com/


HOWEVER:
If you just want to daytrade outrights for points not handles, then forget all the above and just look at it as if it were the price of apples and oranges much as day traders do when trading any other outright. Nothing wrong in that per se - but it's a tough gig and few succeed as we all know.


Hope that gives some direction.


Last edited by TheDude; June 26th, 2013 at 02:03 PM.
Reply With Quote
The following 12 users say Thank You to TheDude for this post:

Reply



futures io > > > > Trading treasuries... what do I need to know?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



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

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Signs indicate Treasuries could be a bubble about to burst kbit News and Current Events 0 June 13th, 2012 07:18 PM
Cooperman Says Avoid Investing in Treasuries Amid ‘Financial Repression’ kbit News and Current Events 1 February 22nd, 2012 05:27 PM
Unreported Bedlam In Treasuries Signals Massive Panic Quick Summary News and Current Events 0 December 12th, 2011 03:40 AM
Foreign Central Banks Selling US Treasuries at Unprecedented Levels GridKing News and Current Events 0 October 16th, 2011 01:52 PM
Jim Rogers may short Treasuries: this afternoon kbit News and Current Events 0 May 10th, 2011 07:02 PM


All times are GMT -4. The time now is 01:04 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 2017-12-13 in 0.11 seconds with 19 queries on phoenix via your IP 54.82.79.109