Creditflux Newsletter

Do you know a surefire trading strategy that will deliver big profits from credit default swaps? Have you spotted a few individual credits that should be making you very rich? Because we’re offering you the chance to prove your theories – and to show you’re better than the whizz kids in your front office.

This month, Creditflux introduces the first trading game for CDS. In association with retail credit derivatives brokerage Traccr, we are inviting up to 100 readers to put their skills to the test in an anonymous contest of trading prowess.

This simulation of a real-life credit trading environment allows everyone from bank risk manager to senior legal partner prove their skills in our simplified version of the credit derivatives market.

All trades are in rolling maturities of five years, so there is no effect from duration shortening, and there are no cash bonds, so all trading is through credit default swaps. But while that means that several popular real world strategies, such as curve trades and basis trades, are out of bounds, there are still plenty of fantasy trades to put on, with 150 of the biggest US, European and Asian single names as well as several credit indices available.

Again, for the sake of simplicity, all trades take place in a single currency (exchange rates will be notionally fixed for the duration of the game). Margin is a little less onerous than you might expect in the real-world: currently it is at a fixed 10% of the notional of all trades. But some aspects of the game are all too real. If a position move against you and wipes out your collateral, you are out.

On top of the kudos and satisfaction of winning Creditflux’s trading game, the top five traders will also receive a prize of an Apple iPod Touch 16GB media player. The winners will be those who have generated the greatest profit from a starting stake of €100,000 by 5pm UK time on 13 October.

The contest is open to the first 100 readers who sign up before the starting date of 14 July by clicking on the link on www.creditflux.com or visiting www.traccr.com, where you will find the complete rules for the game.

Creditflux will report on the performance of the 100 contestants over the coming months. Entrants must supply real contact details for compliance reasons, but are guaranteed anonymity. Of course, that does not stop you from letting your friends and colleagues know your trading pseudonym if you win big on that financials relative value trade you’ve been preparing.

Trading takes place using the online platform built by Traccr as an educational tool for its clients. The firm, which is based in London, offers (in real life) a service allowing qualifying individuals to trade credit derivatives.

The game costs nothing to enter and all you need is a computer with a web browser. It is provided as a fun and educational experience for Creditflux readers. Numbers are limited for practical reasons, so make sure you sign up soon.

May the best trader win.

Sign up to play the game here