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Sorry for this tardy reply - but I'm on the road a lot this month. I think a
person can trade whatever market he or she cares to trade. The important thing
is knowing the factors which influence those markets - and that includes who
the dominant players are.
BTW - why would the ratio of open interest to volume tell you anything about
the character of the players in the market? I assume you're assuming that all
hedging is long term (i.e., hedgers trade less than speculators). Is that your
assumption? I'm not sure that's a valid assumption on your part (i.e., a
primary treasury dealer might want to hedge a purchase for a very short period
of time - for example, until it had resold what it bought at auction). But
perhaps it is - and I'm interested in hearing why you think ratio of open
interest to volume is significant in the bond markets. Robyn
Neal Chabot wrote:
> So I suppose you would never want to trade a market where
> hedging is a big factor?
> Only trade those markets dominated by traders, few hedgers?
> You seem not to understand the futures markets, in particular the
> distinction between hedging and trading.
> Since you do most of your "work" in long-term bonds, perhaps you could
> supply some statistics for your claim that most of the money in munis comes
> from the hedgers. (clue: ratio of open interest to volume). Maybe you
> are right, in which case I will happily trade against the hedgers.
>
> Neal
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