T2W Bot

Staff member
1,498 115
Spread trading is very good for the smaller account traders after they figure out how to trade Spreads. The capital required to trade these Spreads is a fraction of an outright Futures contract. Figure 1 shows a comparison of a Corn Spread to an outright Corn position.
image1.jpg

Figure 1
Spreads generally move much slower than outright Futures positions, thus reducing some of the risk involved. By combining the use of Spreads and Seasonal Patterns of Commodities, we can get that added edge that most traders don’t have. Spread trading is one of the best kept secrets on the exchange trading floors. Not many small traders follow these, but you can be assured that the large traders and commercial traders are looking at and using these Spreads.
Spread Trading has been referred to as “Hedge Trading.” Remember that Hedging is the method Commercial traders use to help reduce price risk volatility. They may own the physical...

Continue reading...
 
Last edited by a moderator:

SanMiguel

Experienced member
1,136 25
It's not as simple as that as financing is also taken into account.

Many do this on the sport price of oil and the futures contract. However, to make that worthwhile you actually need to own a tanker somewhere. Just going long spot and short futures will incur fairly high transaction costs compared to the spread.
 

markussery

Newbie
1 0
Actually it is that easy. Many use Tradestation without high transaction cost. Not sure where you need to own a tanker. I think you aren't getting the concept of future spreads, it is a common transaction. Do a search for Don Dawson he has many great articles on spreads from online trading academy.



It's not as simple as that as financing is also taken into account.

Many do this on the sport price of oil and the futures contract. However, to make that worthwhile you actually need to own a tanker somewhere. Just going long spot and short futures will incur fairly high transaction costs compared to the spread.
 
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock