Trading Treasury Bonds

I trade the TBond TNotes10 spread. I also trade some other spreads. I can say you can get good results on them but watch out : Don't trade on the spread price only.
I got lazy just two weeks agoo on the BUND / BOBL spread (Eurex) and decided to enter the trade based on the spread price, It went against me for over €1000,- per contract (And I trade several) Right now, I'm comming back (luck, nothing more, nothing less) but I've learned my lesson, I don't trade of the spread price anymore.
 
Rsprengers, sorry to hear about your eurex debacle. When you mean you should'nt trade the spread price do you mean just doing it 1-1? Buy 1 BOBL/Sell 1 Bund or vice versa. I take it you mean wiegh the spread? Thanks
 
Marathon,

The Handbook is definitely a Good Book for reference, but The Bond Basis Book by Terry Belton and Galen Burkhardt is another Bible for Bond traders.

Riskless

Quote from MarathonTrading:

Eldredge,

You are talking about flattening / steepening of the yield curve. That's the core of bond trading.

If you buy the bond and sell the note, that's a flattening trade because what you expect is the yield curve to become flatter one way or another (there are different possibilities).
Steepening is the inverse (example: buy the 2yr sell the 5yr)

Concerning the ratios, you need to study the concepts of duration and risk. Let's say duration of a 10yr bond is 8 and duration of a 5yr bond is 4: if you play this spread, your position should be twice bigger in the 5yr.

This is really a complex subject (for example, for futures the 10yr note is not a real 10yr because the cheapest to deliver is maybe an 8yr bond).

Reference author on this subject is Frank Fabozzi. The Handbook of Fixed Income Securities is the bible for bond traders.
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Maybe a beginner to Bonds would be better off trading the Bund long or short ?

Any advantage to trading the Bund (for example), rather than trade the e mini's?

I write as someone who has never traded the Bund/Bonds.

:confused:
 
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