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Approaches to Trading and Hedging

It is not the intention of this book to suggest trading “strategies” as such, or any particular approach to running a fixed-income market making or proprietary trading book. Rather, we will discuss certain approaches that have worked in the past and may, given the right circumstances, work again at some point in the future. It is the intention however, to focus on real-world application whilst maintaining analytical rigour. The term trading covers a wide range of activity. Market makers who are quoting two-way prices to market participants may be tasked with providing a customer service, building up retail and institutional volume, or they may be tasked with purely running the book at a profit and trying to ...

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