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STIR Futures: Trading Euribor and Eurodollar futures by Stephen Aikin

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4. Trading Considerations for STIR Futures

Zero-Sum Game – Know the Players

Futures trading is a zero-sum game: one participant’s financial gain or loss is exactly balanced by the financial losses or gains of other participants. Put another way, one trader’s gain is another trader’s loss.

During each trading day, a very considerable sum of money changes hands as price movements translate into changing profits and losses. This monetary swing is based upon both traders’ existing positions and on new money coming into the market. For each existing position in the market or for each new position taken out in the market, there has to be a trader on the other side of the deal. For buyers there has to be a seller and for sellers there has to ...

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