trading strategies

Sitting from the stands its easy for me to pass comment on the market.

1. Quite clearly the Bond market had mispriced the Curve and more accurately mispriced the Long end of the curve. 2. Alot of traders are viewing these moves as hugely volatile, and viewing spreads levels as anomolies. They need to change their perspective immidiately. In hindsight, the anomoly they should be refering to, was the last 6 months curve/price action. 3. Remember this market is trading on momentum and fundamentals. Be very careful of technical analysis signals.

Strategy

1. Understand the long term significance of the Markets moves. 2. Understand the bond market and the stock are not moving inversely. Understand why? 3. Understand What is driving this market Fundamentally. 4. Understand the ramifications on your part of the curve from this fundamental shift. 5. Develop new strategies to take advantage of the volatility and inneficiencies. Not trade from the back foot all day. 6. Develop strategies that are suitable given the markets volatility. 7. Understand what could turn this market Bullish/Bearish and the immidiate effects on your spreads. 8. If trading STIRS look at the price of the contracts inversely, ( 100-price) write down some levels on a piece of paper that you feel based on the 3mth deposit rate are important in EACH CONTRACT. Then use this to help you form some sort of ranges of your flies and condors. 9. Trade strategies that you can control the risk effectively, that can harness the inneficiencies. 10. Spend time on this list. It WILL make/save you alot of money.

I keep banging on about it.

look at the eurodollars vs treasuries. look at the euribor vs EGB's

Good luck

Malcolm Baker www.curve-trader.com 44 1277 899930

malcolm baker

6/10/07