Bonds are one of the main stream types of investment along with stocks and real estate, and if you want to learn how to trade bonds make sure that you get a good education in the subject 1st. There are certain things you must understand about bonds before you start investing in them. Not fully understanding these things may cause you to purchase the wrong bonds, at the wrong maturity date.

Like all investments it is important to learn about what you are investing in, and certainly don’t just take the advice given to you by a bond seller without checking it out first yourself. The three most important things that must be considered when purchasing a bond include the par value, the maturity date, and the coupon rate.

The par value of a bond refers to the amount of cash you will receive when the bond reaches its maturity date. In other words, you will receive your initial investment cash back when the bond reaches maturity.

The maturity date is the date that the bond will reach its full value. On this date, you will receive your initial investment, plus the interest that your money has earned.

Corporate and State and Local Government bonds can be ‘called’ before they reach their maturity, at which time the corporation or issuing Government will return your initial investment, along with the interest that it has earned thus far. Federal bonds cannot be “called”.

The coupon rate is the interest rate that you will receive when the bond reaches maturity. This number is written as a percentage, and you must use other information to find out what the interest will be. A bond that has a par value of say $2000, with a coupon rate of 5% would earn $100 per year until it reaches maturity.

Because bonds are not issued by banks, many people don’t fully understand how to go about buying one. There are two ways this can be done.

You can use a broker or brokerage firm to make the purchase for you or you can go directly to the Government. If you use a brokerage, you will more than likely be charged a commission fee. If you want to use a broker, you should shop around for the lowest commissions!

Purchasing directly through the Government isn’t nearly as hard as it once was. There is a program called Treasury Direct which will allow you to buy bonds and all of your bonds will be held in one account, that you will have easy access to. This will allow you to avoid paying a broker or brokerage firm.

More advanced traders may try to buy and sell bonds to take advantage of the price movements, you can even swing trade them. But this is a very risky business if you don’t know what you are doing, you will need to take a swing trading course if this was something that wanted to, but again most people just buy and hold.

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Did you know that there are 4 mains types of trader and depending on what sort you are will determine many parts of your trading strategy and trading plan. The 4 types are generally referred to as: scalping, day trading, swing trading and position trading. When you determine the type of trader that you are it will also determine the time period in which you will be making your trade. This will be a very important decision that you need to make when deciding how you want to learn to day trade.

1. Scalping Trader, if you scalp the market this means that you are only looking for a few ticks profit per trade and you may only be in the trade for a few seconds or a minute at most. trading. Some people will also call this day trading but it’s really micro day trading, buying the bid and selling the offer, it’s fast trading and you might end up doing 10-50 trades a day. This is a very stressful way of trading for many people.

2. Day Trader, the true day trader opens and closes their trade within the same trading session, usually this mean the same day, but unlike a scalper the trade may be held for a few minutes up to several hours. Usually day traders make about 2-6 trades a day and most of them will be in the 5-30 minutes range. This is a less stressful way of trading than scalping but it still requires a lot of attention and quick decision making.

3. Swing Traders, swing trading usually means that a position is held for between 1 to 5-10 days, although some swing traders may keep a trade on for longer most are within this time period. For many this is the idea way to trade because it allows you to review your trade overnight, at the very least you have several hours to make your trading decisions.

4. Position Traders, this just means that you are going to hold onto your trade for longer than a few days, maybe even as long as 1 to 2 months.

If you are still working out how to day trade then it may be better to go with the longer time frames as it gives you more time to think.

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