Andy's Spread Trading Journal

Andy,

Could you please elaborate on your risk and money managment approach to trading spreads? Earlier in the post I saw something about risking 8% of your account. Does that mean that you will not alocate more than 8% of the entire account to a particular spread position, or does it mean that your initial stop loss is located at a point where potentialy you could loose 8% of you account? Great Journal! Thanks!
 
Hi bastiat8,

I am always using the same % of risk regarding the size of my trading account on each trade.

For example: I am using 8% in the journal. This is pretty much for me and I would not use 8% trading a 50k or bigger account. Then I would reduce to 5% or even lower.

We did start with hyp. 20k. 8% of the hyp. account would have been $1,600. If you want to risk for example $500 on one spread contract you could trade 3 contracts (I count 1 buy and 1 sell as one spread contract!)

This way I am risking much at the moment the account gets bigger and less if it gets smaller.

Happy trading,
Andy
 
Trade

Because I was leaving for Germany on Thursday I got out at -0.14 of my ED - ED spread. I just don't like it to hold any possition when I am traveling.

Look what's going on today in ED ... GRRRRR!

Hyp. is about the same.

Happy trading,

Andy
 
Trade

You won't belive it but I did enter a trade :-)

4 x LCZ5 - LHZ5 on 09/12 at 25.60. Risk is $800, target 32. I did enter the trade based on seasonality and the resistance around 24.

I covered already one lot yestarday at 26.20 to cover commission.

I did also watch LHJ6 - LHG6 and LCG6 - LCM6 for an entry but I did want to take the trades together.

At the moment I am watching some soy - corn spreads.

Will keep you updated.

Happy trading,

Andy
 
hi andy.

whats your view on taking profit on spreads? i guess you scale out like joe teaches, trailing the last spread????

i ask because i was in the eurodollar spread last week.

there came windfall profits the next day. i thought it would keep going up for the seasonal window was a week away - but it didnt & collapsed.

generally, is it better to take windfall profits quickly (as in directional/outright trading) and close out the position, or is it better in your experience to try and hold on until the end of the seasonal window?

cheers
 
Hi Fred,

I think there is no general question to this answer.

Sometimes the market shoots up...you take some money...and the next days it moves even higher.

Sometimes it shoots up and you wait...and the next day it is down.

I personally take my profits with some lots pretty early and use a trailing stop for the remaining lots. Sometimes too early, this is my weak point and I am working on it.

But honestly, I think it is more important to concentrate on the losing trades to get out really fast.

To get out fast on the winners and slow on the losers will kill your account.

happy trading

Andy
 
Trade

Because I was leaving Germany to go back to the Caribbean I did exit my LCZ5 - LHZ5 spread on 09/20 at 25.70.

Hyp. profit was $360 - $200 commission = $160.

Hyp. account now at $41,751

I am watching some spread at the moment. It seems spreads are getting better again.

Happy trading

Andy
 
Trade

I did enter the following trade:

3 x KWZ5 - SX5 on 09/24 at -200. Risk is $1,000, stop at -217 at the moment. I will use a time stop till Friday. Basis is seasonal and a Ross Hook.
 
Andy,

Could you please show the calculation for how exactly you got the $1000 RISK. I am confused :confused: ...

If you entered at -200 and the stop is at -217, i.e. 17 cents away. Doesn't that equal 17x$50=$850/Spread, and since you entered 3 spreads, is the total Risk not $2550??? I am completely new to this so my calculations may be WAY OFF...
Thanks!
 
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