Radical Guide to Online Bond Investing: 2 Ways to Price Check Bonds

Bond trading is a show of mirrors.  The dealer looks all-powerful, standing like the Wizard of Oz in the control room.  With information on the traded markets gained from price checking, the investor gains stature and will not be easily cowed.  (Here comes Toto to reveal the Wizard’s power).

When you alert dealers to your price checking, they become more cooperative.  Price checking forces the dealers to find the lower-cost providers in the marketplace.  Dealers may even show a willingness to cut their spreads, especially for favored and repeat bond customers.

Price checking gives you more trading leverage.  Here are two good ways to price check bonds:

  • Use the publicly available and free online trade reports.  Both municipal and corporate bond trades are available “real-time” within 30 minutes of a trade in their respective markets.  (See the following chapters on municipal and corporate bond trade reporting).  The trade reports will enhance your information set and provide you with ballpark pricing for your next bond trade or your current holdings.
  • Use the bid and offer quote requests.  We mentioned quote requests as a required feature of your online bond trading (4 Things You Want to Trade Bonds Online).  This is a way to get price indications from the many dealers in the marketplace: It provides you more choice and creates more competition for your trades.    

We’ll now discuss how to access the trade reports.

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June 3, 2005 | Permalink

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