Know The Yield Curve Before Trading Interest Rates
Interest rates play a pivotal role in all financial markets. No matter what market you trade whether it is stocks, forex, futures, options, ETFs, commodities, bonds etc, you need to keep an eye on the interest rates. A yield curve is a representation on the graph that compares the entire spectrum on interest rates available to investors.
You will come across three types of shapes on the yield curve. The normal curve rises to the right and the short term interests are lower than the longer term interests. A normal yield curve represents normal economic activity where investors are being rewarded more for investing in longer term securities with a premium on longer term interest rates.
Now, most of the time you will come accross the Normal Yield Curve. But sometimes, you will find the Yield Curve to be Flat. When you find the Yield Curve to be Flat, it means that all the interest rates in the economy are equal. What this indicates is that economic activity is slowing down.
An inverted yield curve develops when the longer term interest rates become lower than the short term interest rates. Now, an inverted yield curve develops when the economy goes into a recession or during times of financial crisis when the traders flock to the safety of longer term US Treasury Bonds.
Now, the longer the maturity of the security, the higher will be its yield. Now longer the maturity, the greater is the potential reaction to the good or the bad news. In other words, longer term bonds are more volatile.
If you want to trade interest rates short term than Eurodollars are the best instruments that you can trade. Eurodollars are well suited for small traders because of the low margin requirements. Eurodollars also tend to be less volatile and have a highly liquid market due to the large number of market participants. However, like any other futures contracts, Eurodollars position needs to be carefully monitored. Ten Year T Notes and T Bonds can be highly volatile. You can also trade options on these interest rates futures.
Trading interest rate futures is no different than trading other futures contracts. When you trade interest rate futures, you need to pick your entry and exit points carefully including the worst case scenario that might include taking a margin call. You also need to keep in mind what the economic calendar has in store for you for that day.
Mr. Ahmad Hassam has done Masters from Harvard. Know this shocking Dow Futures secret that can make you rich. Download this Quantum Swing Trading Report plus the Forex-4 Pack and the Profit Button Report FREE just now!
|
|
 |
 |
|
Sazze Fights Sluggish Economy with Sazze Mobile
"We're in a really sluggish economy right now." Says Sazze intern Zia Ahmad. "We wanted to help fight that by introducing something that would give customers the lowest prices, and best advice, immediately to help them make the best buying choices possible." Sazze hopes to do this with the launch of their new cell phone application site : Sazze Mobile.
The Little Site That Could Has Generated Over 1,500 Users and a Staggering 17,000 Reviews in Less Than a Year
"I've always pronounced it like the word 'Snazzy' minus the 'n'," says Tim C. "The way I pronounce it is 'saz'... as in rhyming with the name 'chaz'," says Anabel C. No one for sure how to pronounce the name of this new social product review site, but new users are signing up by the dozens, and not just to try to guess the pronunciation of the Korean word.
MENA Water Resource World Conference in Dubai Shares Updates on Region's Water-Management Policies & Investment Opportunities in Middle East
The "MENA Water Resource World" conference, held under the patronage of H.E. Rashid Ahmad Bin Fahad, UAE's Minister of Environment & Water meets in Dubai on January 19-20, 2010. Invited government representatives from Middle East, namely UAE, Saudi Arabia, Qatar, Oman, Tunisia, Libya and Algeria will unveil upcoming investment opportunities while experts will address financing, public-private partnerships, water management tools and solutions in the region including leakage management, desalination, sludge management and wastewater treatment
Mid-East Pastry Delight Announces Newly Updated Website MEPDelight.com Featuring Middle Eastern Sweets and Pastries
Mid-East Pastry Delight has launched a newly updated website at MEPDelight.com featuring Middle Eastern sweets and pastries and cookies like Backlava, Macaroons, Mini Pistachio Karebej, and more, for sale.
Why Lithium Mining Stocks Are The Hottest Investments Right Now
Oil is being pumped at such a high rate from the oil wells that most of them have gone dry and the remaining ones will get dry in the coming two decades. The end of oil as a cheap source of energy is almost near.
Afghanistan’s Emerging Mortgage Market Gets the Push Investors Were Waiting For
Wall Street arrives in Kabul: A unique endeavor has brought affordable housing to the forefront of Afghanistan’s economic stage.
QuestNet Ushered into the 2010 GP2 Asia Season with a Podium Finish
Leading direct selling company, QuestNet continues its third year association with Malaysian motorsport ambassador, Team Meritus in the 2010 GP2 Asia championship.
Former Taliban See Opening for Talks with Obama, GlobalPost.com Reports
Two former high-ranking Taliban insiders encourage talks with Obama Administration in exclusive interview with GlobalPost
Apress Launches Alpha Book Program
Apress is excited to announce the launch of the Alpha Program, which gives customers the opportunity to help Apress Editors create one of our new titles.
Berkeley Prize Announces Eleventh Annual Competition Cycle
The international Berkeley Prize for Undergraduate Design Excellence launches on November 1, 2008, announces Professor Raymond Lifchez, Chair, Berkeley Prize Committee.
|
 |
|
