Spread or pairs trading is a very effective way to hedge your risk exposure to the movements of the broader market. With pairs trades you can make profits through simple and relatively low-risk positions. The trade is market-neutral, which means the direction of the overall market does not affect profit […] Read more
There are many variations of the yield curve to trade, and it can be confusing which is the right one for your needs. So you may be wondering, which should I trade? The answer is relatively simple, if you understand your personal capacity and tolerance for risk, and whether you are […] Read more
In a previous post on Yield Curve Trading I list all the popular yield curve spreads that institutional and professional traders watch. The TUT spread is the 2-year over the 10-year Treasury futures spread. It’s a pairs trade that’s the difference between the notional values of the two contracts (cash value […] Read more
When we speak of hedging, what we’re really talking about is a pairs trade, where we go long one asset and short another. We hedge to take advantage of several key aspects of Treasury futures. The most important is the edge we get by eliminating the directional aspect of price […] Read more
Yield Curve trading using futures has been the bread and butter of large institutions and professional traders for decades. This type of spread trading offers excellent returns and hedging opportunities in one of the most liquid markets in the world, US Treasuries. In our opinion, broader adoption to this type […] Read more
The New Year is finally here, and we are anticipating the market to make an exciting New Year’s resolution that will benefit traders. While volatility lacked in 2016, we expect the market to change it’s ways, and be more volatile 2017. The key driver for volatility revolves around the uncertainty […] Read more
Let’s face the facts— The news has been notoriously wrong about a lot of things this year. From Brexit to this U.S election, the mainstream media can’t seem to get it right. If there is one thing we learned this year, it is that the market listens to no one. […] Read more
Statistical Arbitrage is a pairs or spread trading strategy, predominately used by hedge funds, investment banks, and professional traders. The strategy involves tracking the difference in notional value between two highly correlated instruments, like Silver and Gold futures, or the NoB spread, which is a trade between the 10 year […] Read more
After ten years, the Federal Reserve is finally making moves to tighten the belt on monetary policy. The question is, did they wait too long? In the beginning of the year, the Fed raised interest rates for the first time in a decade and the results were less than desirable. With […] Read more
