Spread trading assistance required

[barryb]

Hi guys

Please could someone explain to me how Interest rate futures spread trading works. I understand that this can be a lower risk trading strategy, however does that mean that the potential profits are also limited? Taking a successful positional interest rate futures spread trader and comparing him to a successful directional futures intra-day trader, which trader would be the most profitable? I realise this comparison relies on certain economic events occurring to alter the respective markets, however for the purposes of this question, please assume that the optimum trading conditions are presented for both traders.

Your help is appreciated.

Barryb

 

[-oo0(GoldTrader)]

Slippage

Eurodollars have the most liquidity.

Please could someone explain to me how Interest rate futures spread trading works.

Buy low, sell high

I understand that this can be a lower risk trading strategy, however does that mean that the potential profits are also limited?

Spreads are lower risk, whether it is interest rates or grains is irrelevant.

Taking a successful positional interest rate futures spread trader and comparing him to a successful directional futures intra-day trader, which trader would be the most profitable?

If you compare a long term trader to a short term. The long term will generally have more profits.

I realize this comparison relies on certain economic events occurring to alter the respective markets, however for the purposes of this question, please assume that the optimum trading conditions are presented for both traders.

What kind of events?

 

[neil]

Use the "SEARCH" facility above . This subject has been discussed here before. I think Joe Ross has written books on the subject, he too is discussed here, again you can find references to him by using the "Search" facility.
Good luck.

 

[-oo0(GoldTrader)]

90% of traders lose

Use the "SEARCH" facility above . This subject has been discussed here before. I think Joe Ross has written books on the subject, he too is discussed here, again you can find references to him by using the "Search" facility. Good luck.

I searched google on Ross and he says

90% of traders lose money​

Ross> But what about the 10% that are successful?

Imagine the following situation: 10 people are sitting around a table and everybody puts 100 dollars in the middle. After a few minutes one person stands up, takes most of the money and leaves. 9 people remain sitting at the table fighting over what's left over.

 

[TWI]

barryb,
It is not a "lower risk" trading strategy it is just a scalping methodology favoured by locals as the margin to profit ratio is very good and the risk can generally be minimised to costs. Fact is that since the markets went electronic this has tightened up a lot and today in order to make decent money you need to take quite a lot more risk than was necessary even 12 months ago. Only consider this if you have very fast direct exchange access with professional execution software. This style of trading is how some people on these boards, including myself, make a living. I do not recommend it unless you can devote many hours per day to it and are prepared to lose for quite a few months while you get the hang of it.

 

[barryb]

spreads

Thanks for the replies guys, much appreciated.