One of the observations I’ve made in communicating with traders and learning of the markets they are trading is how few people are involved in trading fixed income. That’s the interest rate market – sometimes also referred to as the money market.
I am not overly surprised at how few individual traders are active in the fixed income market. It is one that is definitely dominated by professional traders. Unlike the way the forex market has opened up over the last several years to become much more accessible to the individual, there has been little change in the primary ways activity takes place in fixed income trading.
That is not to say, though, that fixed income trading cannot be profitably persued by the individual trader. It most certainly can be. In fact, if you like action, the fixed income market is probably the best place to be. It is definitely the most responsive to things like data releases and other significant news events.
Even if you never actually trade fixed income, it is definitely worth understanding. Probably the biggest thing I discovered when I started my first professional analytic job after college was how important and integrated interest rates where on all other markets. Knowing how they move can help you understand more about how the influence the stock and forex markets especially.