This page looks at the individual Government bond contracts offered by the Spread Bet brokers, including some points to watch out for.
Spread Betting Bonds
1. Spread Bet On Government Bonds
Spread bets are offered on all the major Government Bonds, including –
- Gilts (UK)
- US Bonds – T-Bonds, 5 & 10-year Notes
- Euro Bonds – The Bund, Bobl and Schatz
- JGB – Japanese Govt. Bond
Points to Consider
- No daily cash bets are offered on the bond contracts; only the quarterly bets
- All non-US bonds are priced in decimals
- US T-Bonds and T-Notes are priced in 32nds and 64ths, respectively, but the spread betters will quote them as decimals, so a 5 year Note that is trading at 110 49/64 is quoted at 110.245
2. Spread Bet On Interest Rates
The spread betting firms don’t offer an individual market on interest rates, but they quote the short-term money market contracts, including –
- Short Sterling (UK interest rates)
- Euro Dollar (US rates – although called Euro Dollar, it has nothing to do with Europe or the Euro)
- Euribor (European interest rates)
These contracts are simple to understand. If the Short Sterling mid-price is 98.78, that equates to an interest rate of 1.22% (100.00 – 98.78). Buy these contracts if you think rates will fall, and sell short if you believe rates are going to climb.
Points to Consider
- Interest rate contracts move slowly; a large daily move is 15+ points
- There are no daily cash bets offered, only quarterly bets
- Many months are offered to trade; for example, say it is Jan 2022, there will be Mar, Jun, Sep and Dec contracts for both 2009 and 2010
- Traders who use these markets normally hold positions for many weeks, if not months
WARNING! – Spread Bet Broker Advice
There are good spread bet brokers, and there are bad ones.
Having a good broker won’t guarantee you profits, but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.
Bonds and Margin Trading: A Comparative Analysis
Margin trading and bonds both offer unique opportunities for traders. Our Margin Trading guide provides an in-depth look into leveraging positions, a concept that can also be applied to bond trading within a spread betting framework. Understanding the mechanics of margin trading from Bonds to Spread bet commodities can enhance your bond trading strategies. This is particularly useful for those who are looking to maximize their capital efficiency.
“Margin trading allows for greater capital efficiency, which can be applied to bonds.”
Bonds in the Context of Indices
Bonds and indices are both popular financial instruments in spread betting. Our Indices page offers insights into how these two can be part of a diversified trading strategy.
- Understand both for a more rounded trading experience.
- Allows for better risk management.
Regulatory Considerations for Bond Trading
Regulation is a critical aspect of any financial trading, including bonds in spread betting. Our Regulation page provides essential information on the regulatory landscape. Being aware of regulatory requirements can significantly impact the success of your bond trading activities.
Bonds and Day Trading: A Strategy Overview
Day trading involves making multiple trades within a single day, and bonds can be a part of this strategy. Our Day Trading guide discusses the intricacies of such an approach. Incorporating bonds into your day trading can add a layer of stability to your portfolio.
“Day trading with bonds can offer a balance between risk and stability.”
The Role of Bonds in Financial Spread Betting
Financial spread betting is a broader category that includes various financial instruments, including bonds. The CompareForexBrokers Financial Spread Betting guide offers a comprehensive overview. This knowledge can be pivotal in crafting a well-rounded financial spread betting strategy. Understanding the role of bonds within this context can provide traders with additional avenues for diversification.