QUICK, WHAT’S THE first thing you think of when you hear “interest-rate investing?” Slow. Conservative. For the nearly retired? Or perhaps you think it’s confusing, complex, and best left for Wall Streeters to deal with. After all, you’re a trader. So there’re no opportunities here, right? Not true.
In a nutshell, when you invest in bonds, you’re investing in interest rates. And it’s the volatility in interest rates that provides traders with ample opportunities—mostly brought on by anticipation of what the Fed plans on doing with them now and into the future.
Perhaps bonds got their slow and steady reputation from the ones we used to get from Grammy and Grampy each birthday when we were kids. Or maybe it’s because they’re talked about by nearly every financial advisor as part of a “balanced portfolio” approach for longterm investors.
Since volatility brings opportunity, it’s worth learning the basics as well as the products that capitalize on interest rate volatility. In this issue’s cover feature, “Dick and Jane Party with the Fed,” we break it all down to help you decide if you want to dabble in this world.
Of course, with volatility comes risk—whether you’re trading bonds, stocks, options, or any other financial product, for that matter. And although risk may appear in many forms, for traders, there are two primary types you should be concerned with. In our special feature, “Don’t Get Roasted,” you’ll learn how to analyze risk using the tools at your disposal. As for the risk in trading lofty stocks in a bull market that’s long in the tooth, “A Cure for Trading Vertigo” introduces a strategy that might help you sleep better at night if you’re still eyeing that $300 stock.
As a trader, what keeps you up at night? Which tools and strategies have you wanted to learn more about, and what have you been hoping you’ll find in these pages? Hit us up at firstname.lastname@example.org.