Yield Curve / Spread Trading Strategies

Spread trading is considered by many to be a style of trading which can provide the longest, most consistently profitable career.  This is particularly true nowadays as momentum style day trading becomes increasingly dominated by high frequency trading algorithms. Spreading is a style of trading where one does not require expensive news feeds or the fastest high frequency networks. It is a form of trading that allows one to manage their trades less excitedly. As a result, the stress factors that often cause day traders to lose money are less present with spreading.

Spread trading involves taking a position on the change in price between two similar futures or options contracts, rather than betting on outright price direction. This style of trading tends to have far more reliable patterns of ebb and flow and requires far less margin. This means traders should find it easier to follow a risk management strategy, and trade larger with less risk.

This course will focus on futures in the US treasury market, which is the most active bond market in the world. What you learn in this course can be applied to other markets as well, including: European, British, Canadian and Japanese treasury markets, as well as grain futures and stock index futures. You will learn specific strategies for trading intra-market spreads as well as the macro-fundamental knowledge required to make well-reasoned trading decisions. A knowledge of reading charts or using technical indicators is not a prerequisite. Instead, you will learn how to read a spread matrix, execute a trade on a popular platform and understand why and when to exit a trade.

Taught by a career spreader with over 40 years in the business as a trader and trainer, this course will give you a solid foundation to building your career as a trader.

Key ‘takeaways’ and topics to be covered in this course

  • Learn spread trading directly from one of the most experienced spread traders in the business.
  • Acquire a solid understanding of the macro-economic factors that affect treasury markets
  • Learn a variety of spread strategies and develop a style of spreading that suits you.
  • Understand how changes in the yield curve influence global capital markets
  • Learn the mechanics of placing spread trades and managing a position.

Module 1.  Rudiments of the Yield Curve

  • What is the yield curve?
  • Learn the various shapes of the yield curve and what they indicate.
  • What are the factors that make the curve flatten or steepen?
  • How long do these trends of flattening / steepening typical last?

Module 2.  Monetary and Fiscal Policy

  • What is monetary and fiscal policy?
  • Learn the impact of policy on the yield curve.
  • Learn about central banks and their influence on the curve.
  • Learn how to use central bank guidance to shape your trading strategies.
  • Learn about inflation and deflation and how treasury markets respond.
  • Which economic indicators will have the greatest influence on the yield curve

Module 3.  Auctions and Other Factors That Impact Supply/Demand

  • We will discuss the mechanics of treasury auctions and refunding; how examine and understand the results.
  • Learn how the Federal Reserve can impact supply and demand.
  • Learn the impact of non-U.S. central banks, financial institutions, and investors on treasuries.

Module 4.   Market Expectations and How They Move Markets

  • Learn how market expectations influence market responses.
  • How do we gauge the impact of economic releases on treasury market spreads?
  • We will discuss symmetrical and asymmetrical market responses.
  • What are grey swan and black swan events?

Module 5.  Geopolitics

  • Learn how political decisions by sovereign nations impact the yield curve.
  • Flight to quality (risk off) can be triggered by a variety of factors (i.e. fiscal and monetary policies).
  • Learn how geopolitics can lead to risk-on and risk-off reactions in the marketplace.
  • What spread strategies should we implement in risk on/risk off scenarios?

Module 6.   Calendar Spreads

  • How does quarterly rollover in treasuries create profit opportunity?
  • Learn how to calculate the value of calendar spreads.
  • Learn about the use of ratios with calendar spreads.
  • We will discuss trade execution for calendar spreads.

Module 7.  Ratio Treasury Spreads

  • Learn about the function of inter market treasury spreads and why they are relevant today.
  • Inter market treasury spread calculation, and execution will be covered in this module.
  • As part of this unit, we will discuss market movement; specifically, mean reversion, trending, and drifting markets.
  • We will consider other inter market debt spreads (i.e. 10 year U.S. treasuries vs. bunds).

Module 8.  Butterfly and Condor Spreads / Wrap-up

  • In this section, we will talk about combination spreads: when and how to use them.
  • Learn how to apply spread trading strategies to other trading products.
  • We will examine your practice trades and suggest a spread trading plan that best suits you.

Course Format

Course length: 2 weeks. Total class time: 12 hours (2 hours x 6 classes) + unlimited access to News vs. Noise chat room (where traders share their expertise, trade ideas and offer support to students.)

  • Classes will be held online via Skype.
  • Schedule to be arranged upon mutual agreement of students and instructor.
  • Students will be provided with access to a live trade simulator.
  • Students will have exclusive online access to learning materials via private learning portal.
  • Class size is limited to 4 students per session to ensure optimal time with instructor.
  • Instructor will guide you step by step into how he trades spreads as he shares his screen with you.
  • Post course mentoring available.

Course price

$1,950.00 Add to cart

What comes next?

As a graduate of the Yield Curve / Spread Trading Strategies course, you will have gained a solid foundation in spread trading the US Treasury market. Your knowledge at this point should be strong enough to begin spread trading with confidence. The learning doesn’t stop here though. Without question, your curiosity is likely to be aroused and you may want to learn how to spread between different exchanges (intermarket), or other products (such as grain spreads) or improve your knowledge of macro fundamentals and Central Bank policy. You will also recognize the importance of risk management.

Therefore, we highly recommend that you also register for courses which would be complementary, specifically, Risk Management and Psychology, and Financial Market Macrofundamentals. These courses together will go a long way in helping you achieve greater success in your trading career.