Riding the Yield Curve

Some active security investors, especially dealers in U.S. Government Securities, have learned to "ride" the yield curve for profit, if the curve is positively sloped, with a slope steep enough to offset transactions costs from buying and selling securities, the investor may gain by timely portfolio switching.
for example, if a securities dealer purchases U.S. Treasury bills six months from maturity, holds them for three months, converts the bills into cash, and buys new six-month bills, he or she can profit in two ways from a positively sloped yield curve. Because the yield is lower on three-month than on six-month bills, the dealer experiences a capital gain on the sale. Second, the purchase of new six-month bills replaces a lower-yielding security with a higher-yielding one at a lower price. Riding
The yield curve can be risky, however, since yield curves are constantly changing their shape. If the curve gets flatter or turns down, a potential gain can be turned into a realized loss. Experience and good judgment are indispensable in using the yield curve for investment decision making.