Interest rate spread trading - help!

[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)]

Rom

does that mean that the potential profits are also limited?

Return on margin is greater with spreads. Return per trade is higher naked.

Annualized profits are higher with shorter-term trades. Actual profits are greater with long-term trades.

How many day traders do you think survive the first year?​

 

[barryb]

Thanks for the reply Gold Trader, this thread has seemed to frigthen off a lot of people! So in the long run over a year for example, a successful interest rate spread trader would be more profitable than a successful intraday scalper due to his greater margin? In response to your question, i have heard various different figures quoted. The worst being 10%, a significant number say 50%, some 60%, and just for complete variety one arcade has even told me that of the traders they have taken on, all have graduated to trade live. This arcade does seem to be the exception, as they stick with their traders, even ones after a year who aren't being profitable.