How do you close out a spread trade E.G TUT 02-01 U8.CBOT

R

Ronjohn

Hi,

I have the basic understanding of buying the ten and selling the 5 to make a profit in the difference. What I don't understand is how to properly close out a trade after making a profit or a loss. I was reading that most people do not use stop losses when trading spreads. Can you place a Limit order or best to use a market? Because its a spread trade if you close out do both contracts close out together? I have been watching some YouTube videos but never see anyone close out a trade. Would appreciate any help. Thanks
 
Ronjohn said:
I have the basic understanding of buying the ten and selling the 5 to make a profit in the difference. What I don't understand is how to properly close out a trade after making a profit or a loss. I was reading that most people do not use stop losses when trading spreads. Can you place a Limit order or best to use a market? Because its a spread trade if you close out do both contracts close out together? I have been watching some YouTube videos but never see anyone close out a trade. Would appreciate any help. Thanks
More...
Legging a spread is likes spreading legs, your results will vary. You could and should trade it as a spread. When executed, the appropriate number of the contracts for each leg will be netted with your account position.
 
Ronjohn said:
Hi,

I have the basic understanding of buying the ten and selling the 5 to make a profit in the difference. What I don't understand is how to properly close out a trade after making a profit or a loss. I was reading that most people do not use stop losses when trading spreads. Can you place a Limit order or best to use a market? Because its a spread trade if you close out do both contracts close out together? I have been watching some YouTube videos but never see anyone close out a trade. Would appreciate any help. Thanks
More...
Your best bet it to use a broker that allows you to trade implied spreads. These are spreads that trade just like outright contracts where you can create limit, stop and other such orders. Not all brokers accept such orders and typically the front end software you use must be capable of placing these orders. Check with your broker. If they don't support implied spreads a.k.a exchange-traded spreads then they can tell you the type of spread orders they support.
 
You must log in or register to reply here.
Back
Top