CME: Why Smart Money Trades Spreads

I feel like the deeper issue here may be lots of these new retailers blowing up. CME obviously wants more traders - as we all do - and they need to keep them in the game.
 
Here are some daily P/L records for one month many years ago.

Main Book:
P&L Com/Fee
$115,910 ($8,525)
$3,202 ($8,607)
($109,984) ($13,536)
$47,565 ($11,977)
$24,776 ($9,015)
$170,320 ($19,565)
($74,069) ($9,203)
$109,444 ($10,426)
($11,338) ($18,583)
($76,249) ($10,849)
$132,671 ($30,227)
$6,691 ($7,849)
$38,045 ($8,132)
($174,239) ($7,848)
$4,638 ($9,132)
$147,703 ($8,443)
$97,682 ($6,120)
$10,883 ($2,525)

$463,651 ($200,563)

Book #2:
P&L Com/Fee
$13,328 ($906)
$1,278 ($840)
($10,065) ($1,357)
$5,115 ($1,202)
$2,352 ($911)
$15,517 ($1,958)
($6,274) ($940)
$11,414 ($1,052)
($225) ($1,862)
($8,041) ($1,086)
$14,770 ($3,053)
$661 ($784)
$4,243 ($820)
($17,762) ($790)
$419 ($617)
$15,183 ($1,015)
$12,486 ($779)
$333 ($314)

$54,732 ($20,286)

At about $300k/month, that was a decent month. But commissions really ate into the gross profit. The commissions were about 40% of total gross trading profit.

Certainly spread trading has its own merit for low margins and reduced risks. The question is what is the best reward/risk ratio trading spreads or outrights.

If I can get very low trading cost, I'll be happy to go back to spread trading. But some of the trading fees are not from brokers, but from CME/NYMEX exchange fees. Those are not negotiable.
 
RedSun said:
Here are some daily P/L records for one month many years ago.

Main Book:
P&L Com/Fee
$115,910 ($8,525)
$3,202 ($8,607)
($109,984) ($13,536)
$47,565 ($11,977)
$24,776 ($9,015)
$170,320 ($19,565)
($74,069) ($9,203)
$109,444 ($10,426)
($11,338) ($18,583)
($76,249) ($10,849)
$132,671 ($30,227)
$6,691 ($7,849)
$38,045 ($8,132)
($174,239) ($7,848)
$4,638 ($9,132)
$147,703 ($8,443)
$97,682 ($6,120)
$10,883 ($2,525)

$463,651 ($200,563)

Book #2:
P&L Com/Fee
$13,328 ($906)
$1,278 ($840)
($10,065) ($1,357)
$5,115 ($1,202)
$2,352 ($911)
$15,517 ($1,958)
($6,274) ($940)
$11,414 ($1,052)
($225) ($1,862)
($8,041) ($1,086)
$14,770 ($3,053)
$661 ($784)
$4,243 ($820)
($17,762) ($790)
$419 ($617)
$15,183 ($1,015)
$12,486 ($779)
$333 ($314)

$54,732 ($20,286)

At about $300k/month, that was a decent month. But commissions really ate into the gross profit. The commissions were about 40% of total gross trading profit.

Certainly spread trading has its own merit for low margins and reduced risks. The question is what is the best reward/risk ratio trading spreads or outrights.

If I can get very low trading cost, I'll be happy to go back to spread trading. But some of the trading fees are not from brokers, but from CME/NYMEX exchange fees. Those are not negotiable.
More...
useless; no dates, number of executions - just numbers on a page.
 
RedSun said:
Here are some daily P/L records for one month many years ago.

Main Book:
P&L Com/Fee
$115,910 ($8,525)
$3,202 ($8,607)
($109,984) ($13,536)
$47,565 ($11,977)
$24,776 ($9,015)
$170,320 ($19,565)
($74,069) ($9,203)
$109,444 ($10,426)
($11,338) ($18,583)
($76,249) ($10,849)
$132,671 ($30,227)
$6,691 ($7,849)
$38,045 ($8,132)
($174,239) ($7,848)
$4,638 ($9,132)
$147,703 ($8,443)
$97,682 ($6,120)
$10,883 ($2,525)

$463,651 ($200,563)

Book #2:
P&L Com/Fee
$13,328 ($906)
$1,278 ($840)
($10,065) ($1,357)
$5,115 ($1,202)
$2,352 ($911)
$15,517 ($1,958)
($6,274) ($940)
$11,414 ($1,052)
($225) ($1,862)
($8,041) ($1,086)
$14,770 ($3,053)
$661 ($784)
$4,243 ($820)
($17,762) ($790)
$419 ($617)
$15,183 ($1,015)
$12,486 ($779)
$333 ($314)

$54,732 ($20,286)

At about $300k/month, that was a decent month. But commissions really ate into the gross profit. The commissions were about 40% of total gross trading profit.

Certainly spread trading has its own merit for low margins and reduced risks. The question is what is the best reward/risk ratio trading spreads or outrights.

If I can get very low trading cost, I'll be happy to go back to spread trading. But some of the trading fees are not from brokers, but from CME/NYMEX exchange fees. Those are not negotiable.
More...

Are your fees negotiated or normal retail fees? What is a good broker for such high volume trading?
 
traider said:
Are your fees negotiated or normal retail fees? What is a good broker for such high volume trading?
More...

This was a specialty hedge fund trading NYMEX spreads. Owner was a former NYMEX trader. Capital was mainly from institutions or other hedge funds.
 
I traded many '22 and '23 expiry Nymex and ICE energy futures spreads during 2021 - either exchange supported Butterfly or Condor combinations. Average position holding time frame was ten weeks.
 
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