Oil futures spreads trading system

[cyrustajik]

Hi
Need some help on trading oil futures spreads. Been trading spreads for sometime now but looking to find some new methods or system to help me improve my trading.
been searching on the net and specially this forum but havent been able to find any information on different systems.
Have been trying to use different technical indicators on oil spreads but they dont seem to be working very well. Should I be looking at special range of indicators or does TA have no place in trading spreads?

Any information, tips or advice is much appreciated.
Cheers
Cyrus

 

[Tickdoc]

Have you backtested any of these indicators? Might help you chose one or two to apply to the present...

 

[cyrustajik]

hi
yeah, nothing seems to be working on them. Ive been told TA is not really useful on spreads but I cant really understand how you gonna be able to trade them without any indicators.

 

[anley]

Have you considered the 'cost of doing business' with spread trading/

Unless your commissions are rock bottom or you're holding out for large profits the cost of doing business will probably mean it's impossible to turn a profit overtime.

 

[cyrustajik]

not a home trader. trading professionaly and my costs are lower than average trader.

 

[Aston1st]

I believe that you need to have a good understanding of the fundementals of the Oil Markets in relation to the Technical spread charts. This goes for both Calendar spreads and the Crack Spread.

Depending on the clip size and the time span of holding the Spread will also determine your gains, i.e holding the position for a few minutes, hours or days.

I am sure there are Mentors in your set up who can advise you more precisely. Good luck

 

[arabianights]

how about a box

 

[Aston1st]

Great for Brokers both External and Internal (Prop Firms) !

 

[cyrustajik]

you said it! I sometimes trade flies but never boxes. makes my broker richer by the second!!!
I use spread charts and market profile. But the problem is that spreads just go in their own way. sometimes cant even find a good intraday trade entry.
Just wanted to know if there are any pro spread traders here who could put us newbies in right direction.

Thanks again

 

[day4night]

I trade spreads in various futures contracts -- don't understand what you mean about techs not working. They work very well as far as I'm concerned. And contrary to what the others are saying of course you can make money trading spreads despite the doubled commissions -- in fact even though you're paying more your odds are probably better with spreads vs outrights.

Seasonality is a way to trade. Also, yes, technicals.

And when trading crude, you can also trade intercommodity like WTI vs Brent. Otherwise crack spreads like gasoline vs crude. But yeah, learn what you can about fundamentals. But don't listen when people say you can't trade spreads on techs -- makes no sense whatsoever.

 

[cyrustajik]

This is one helpful reply. lets keep it up people
money doesnt grow on trees!! it usually comes out oil markets

Cheers
cyrus

 

[SuperDriveGuy]

This is one helpful reply. lets keep it up people
money doesnt grow on trees!! it usually comes out oil markets

Cheers
cyrus

Hi Cyrus,
I am a newbie and exploring a lot of different strategies to trade at the moment.

The spread trading looks good, but don't have much info or confidence to actually trade them. For example the FDAX vs FTSE spread looks good.

Can any experienced spread trader please show us an actual(maybe textbook) working spread strategy?
Also, I find that NinjaTrader does not support spread trading the way X-trader does, but X-trader has ongoing costs, so leaves us newbie out I guess..

Regards

 

[-oo0(GoldTrader)]

Heating Oil spreads

Need some help on trading oil futures spreads.

Ok look, you are starting out restricting yourself to a highly volatile commodity traded in New York. You might last longer trading something that will not evaporate your funds so completely and rapidly. You are probably headed for a fall. That aside.

been trading spreads for sometime now.

If you have been around and are truly coming back. Spreads may be your next step.

I have been searching on the net .. but haven’t been able to find any information on different systems.

There are not really many books on spreads try searching Amazon on seasonal spreads.

been trying to use different technical indicators on oil spreads

Trends are caused by market participants. As long as you are tracking the behavior of human beings, trends and double bottoms will be detectable. Oil markets are not any different.

I am going to show you a chart of a recent Heating Oil spread. The spread started about two weeks early, peaking on the alpha crest, right where the seasonal chart suggested. Stochastics, parabolic, trendlines, or any one of a dozen oscillators, combined with the historical seasonal chart would have gotten you in on time. A parabolic trailing stop would have gotten you out near the top, as well as normal trendlines.

Should I be looking at special range of indicators or does TA

Just use the indicators that you are using now that will work on a close only chart. Trade the spread. Don’t be concerned with the news, you will make it on one side and lose it on the other.

Come back soon with more questions.

 

[-oo0(GoldTrader)]

Price pressure

This is just plain bull.

I believe that you need to have a good understanding of the fundamentals of the Oil Markets in relation to the Technical spread charts. This goes for both Calendar spreads and the Crack Spread.

Trading seasonal spreads has all of that stuff built in.

Buy at harvest, let it go during a drought, or a flood later on.

 

[-oo0(GoldTrader)]

Seasonality

Yah like day4night is saying.

contrary to what the others are saying of course you can make money trading spreads despite the doubled commissions

The return on margin is way higher on spreads.

Seasonality is a way to trade. Also, yes, technical.

Historical Seasonality is a key technical component. Learn to read charts.

 

[-oo0(GoldTrader)]

Toepke

Can any experienced spread trader please show us an actual(maybe textbook) working spread strategy?

See: Jerry Toepke's Weekly Spread Commentary

 

[SuperDriveGuy]

See: Jerry Toepke's Weekly Spread Commentary

Thanks GoldTrader!

 

[cyrustajik]

See: Jerry Toepke's Weekly Spread Commentary

Cheers dude
This is one good explanation. started re thinking my use of indicators after this and the results are far better so far!
I come to believe charts and trading systems should be as simple as possible. I do some work in blackboxes as well but thats a whole different game but as far as trading intraday I find simpler methods far better.
And it is possible to make money through spreads. They usually are low risk low return but I would definitely consider having them in my portfolio.

 

[pelzar]

anyone know of any good books related to trading spreads.

 

[cyrustajik]

anyone know of any good books related to trading spreads.

Trading spreads by Joe Ross

sorta old but very good.

Also there is a book called STIR futures. that one is well technical but will give you a good base for your spread trading.