Bond day trading strategy

bond day trading strategy

diversification of maturities and returns. A mental stop-loss set at the point where your entry criteria are violated. Volatility: Volatility is simply a measure of the expected daily price range the range in which a day trader operates. Define exactly how you will control the risk on the trades. Dedicated and active (For more on bonds, read our. (To learn more about options, read our Options Basics Tutorial.) Example: Call Feature Company A issues a 100 million in bonds at a 5 coupon rate to the public market; the bonds are completely sold out at issue. When the first bond matures in 2 years, you reinvest the money in a bond with a 10-year maturity, maintaining the ladder you've constructed.

In a passive strategy, there are no assumptions made as to the direction of future interest rates and any changes in the current value of the bond due to shifts in the yield are not important. One also needs to consider the transaction costs associated with not only the original investment, but also the periodic rebalancing of the portfolio to reflect changes in the index. There is a call feature in the bonds' covenants that allows the lender to call (recall) the bonds if rates fall enough to reissue the bonds at a lower prevailing interest rate. Here the price target is when buyers begin stepping in again. Trading involves risk and requires discipline - I would feel bad charging a lot when there's no way I can guarantee your success, since I cannot control your level of discipline or make you practice! I trade for income, so selling my system is secondary to that, hence the low price. If the strategy isn't profitable, start over. The only variation in total return from the actual coupon yield is the reinvestment of the coupons as they occur. Whenever you hit this point, take the rest of the day off.