STIR crazy

Just wondering because this section is a little quiet - are there any non-scalping STIR traders here?

non-scalping as in not intraday but as in medium to longer term directional bets?

Anonymous said:

non-scalping as in not intraday but as in medium to longer term directional bets?

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Yes, that's what I meant.

Of the common STIR's Eurodollar, Euribor, Euroswiss, and Short Sterling, Euroswiss seems to be the safest to short if near the very top. Although the Euroyen does seem to be the safest to scalp from the top, but when the bid-ask is unfavourable, well,

Anonymous said:

Of the common STIR's Eurodollar, Euribor, Euroswiss, and Short Sterling, Euroswiss seems to be the safest to short if near the very top. Although the Euroyen does seem to be the safest to scalp from the top, but when the bid-ask is unfavourable, well,

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???

What do you mean: ???

The question is,are there any scalpers left in the STIRS?Huge size - there one minute,pulled the next - is it paper?Can I rely on it for a stop?Don't these spoofers ever take a holiday?
Was trading short sterling with longer term views as found intra-day jobbing just a killer for round-trips.
Eventually switched from short sterling altogether as it was just too quiet.

$spreader said:

The question is,are there any scalpers left in the STIRS?Huge size - there one minute,pulled the next - is it paper?Can I rely on it for a stop?Don't these spoofers ever take a holiday?
Was trading short sterling with longer term views as found intra-day jobbing just a killer for round-trips.
Eventually switched from short sterling altogether as it was just too quiet.

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What did you switch *TO* then?

Sorry,I suppose I should have said given the thread - I switched back to the Bond/Note spread but am always interested in people's views on the STIRS and how everyone feels that they are developing.

$spreader said:

Sorry,I suppose I should have said given the thread - I switched back to the Bond/Note spread but am always interested in people's views on the STIRS and how everyone feels that they are developing.

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Short Sterling was a lot more liquid about two months or so back, these days it's a shadow of its former self at *only* a couple of thousand lots on bid and ask. More seriously, I think it and Euribor are now so tight that pure liquidity provision is only profitable if you already can do size and have extremely low costs, so that stops the constant flow of new entrants that seemed to be there a year ago. It's now rare to see a 1-lot step in front of size the way you'd always see in the past, so either the learners have vanished or they are doing something else these days.

Speaking of doing something else, I've always wondered how trading spreads along the longer end of the curve is different from trading outrights, because what you're effectively doing with, say, a Bond-Note spread, is a forward deal on a note 10 years out, so it behaves like a note but with lower volatility and doubled transaction costs. Does that make sense?

My interpretation of the Bond/Note spread is that when looking for a bigger move,say a point in the bonds, the Notes are usually outpaced by 10 to 15 ticks,that being the profit in the trade.Sure I could just sell bonds(or Notes) and halve costs but risk getting in too early and potentially running large outright positions into figures or having to cut them.The advantage to me of spreading them is that I am more comfortable having big positions and can see more heat,run them for days if necessary and if some unexpected news came out moving the markets badly against me being hedged takes the sting out of the losses.

$spreader said:

The advantage to me of spreading them is that I am more comfortable having big positions and can see more heat,run them for days if necessary and if some unexpected news came out moving the markets badly against me being hedged takes the sting out of the losses.

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So far so clear. What I don't understand is that, say, an outright position in the five-year will have roughly the same volatility as two 1:1 Bond-10 year spreads. So if you're trying to ride a trend, you can get roughly the same exposure for 1/4 the transaction costs WITHOUT having to take more heat if it does go pear shaped. Am I missing something?

I suppose it is ultimately about what markets/combination of markets people are comfortable in.I struggled trying to trade 5 yrs. outright and in my experience 1:1 Bond-10 yr spread has a lot more volatility than the 5 yr yet I am comfortable holding a bigger position in the spread,so the transaction costs become insignificant because doing the extra on fees should enable me to make more when I'm right.
It is probably on the same lines as why someone would sell Bund/Bobl instead of just selling outright Schatz,to me it's what you're comfortable with and I (probably because I've spent the last 10 years in the short end) just feel more at home spreading up.