Futures Mag on "Reduced Margin Spreads"

[-oo0(GoldTrader)]

Futures Magazine had an article last month about the advantages of trading “Reduced Margin Spreads.”

It got into the reasons why few traders use, long trending, minor drawdown, high profit, low risk spreads.

How to assess risks in futures.

How to adjust returns for risk.

Using risk to compare opportunities.

How to get higher % returns with less risk.

The article was clear and contained some meat. Some one needs to simplify the confusing prefixes inter and intra. Both start with in but one probably means out.

 

[allinger]

The Bikini is sort of 90-ish... Like the car (and the accessory) though...
Futures Magazine - link perhaps? In my neck of the woods it's not commonly available - and I've given up hope on looking for online ref's...

Br,

/A

[QOTE=-oo0(GoldTrader)] Futures Magazine had an article last month about the advantages of trading “Reduced Margin Spreads.”

It got into the reasons why few traders use, long trending, minor drawdown, high profit, low risk spreads.

How to assess risks in futures.

How to adjust returns for risk.

Using risk to compare opportunities.

How to get higher % returns with less risk.

The article was clear and contained some meat. Some one needs to simplify the confusing prefixes inter and intra. Both start with in but one probably means out.[/QUOTE]

 

[TWI]

These days, in my opinion, spreads are the best diversification in commodities for outright longs or shorts. There is little diversification in outright products as they move as a sector more often than not.
As for low margin spreads, that is all very well but the cost is higher as you pay com on all legs and the net movement is generally less than the outright product.

 

[-oo0(GoldTrader)]

Expenses

Yes! TWI what you say is true, commissions are double what you would pay on one leg. But the thing is in spite of the increased transactions cost, your return on margin may be greater with spreads.

As for low margin spreads, that is all very well but the cost is higher as you pay com on all legs and the net movement is generally less than the outright product.

What I mean is if you put and equal amount of margin up on outrights as you do with spreads, your Rom with spreads will dwarf the singles. This is because margin is related to how the exchange views risk. Because the spreads may be safer they let you put more on for the same security deposit.