newbie futures question..

c.chugani · Sep 9, 2007

hi everybody,

i just recently decided to explore the world of futures. Coming from a background of trading just stocks and warrants.

My question is:

can i remain market neutral by buying one contract and selling another contract [same spot price obviously] with the same brokerage account?

plodder · Sep 9, 2007

imho, with just one account you would need to, say, buy the front month and sell a later month;otherwise, you will have zero position as soon as you executed the opposite trade.

c.chugani · Sep 9, 2007

Quote from plodder:

imho, with just one account you would need to, say, buy the front month and sell a later month;otherwise, you will have zero position as soon as you executed the opposite trade.

ok so i would need to different accounts right? thats what I thought..

is there a big difference in spot prices between front months and later months? Because if the difference was minimal, i could still be able to mantain a [relatively] neutral position with the method you just stated [and using only one account].

rcanfiel · Sep 9, 2007

Quote from c.chugani:

My question is:

can i remain market neutral by buying one contract and selling another contract [same spot price obviously] with the same brokerage account?

Isn't that the same as being flat? To what purpose then?

TradEStar · Sep 9, 2007

Quote from c.chugani:

ok so i would need to different accounts right? thats what I thought..

is there a big difference in spot prices between front months and later months? Because if the difference was minimal, i could still be able to mantain a [relatively] neutral position with the method you just stated [and using only one account].

No...one account with two DOM's. One DOM for convenience showing the front month and your other DOM on the other contract. You can enter trades in both contracts from the same account. If you are going to start trading in both directions at the same time in the SAME contract (same contract period...like both trades in the front month contract) then you need two accounts (but enter and exit at different tick levels in the two accounts so they can't say you are making a market with yourself...like account "A" in the ES plays .25's and .75's while account "B" ONLY plays .00's and .50's).

amt4swa designed a system of HFT trading called the "accordion" back in about 2002 which does exactly as I have described below (and since then several traders in the Austin. TX and other areas have tried to copy what he had designed). Used in strategic market applications at certain times it racks up P&L faster than your head can spin.

Spectra · Sep 9, 2007

Yes, thats called a hedge. You will take a slight loss on commissions of course. Watch this video Alex did.

http://puretick.com/video/hedge/

Cajun

Quote from c.chugani:

hi everybody,

i just recently decided to explore the world of futures. Coming from a background of trading just stocks and warrants.

My question is:

can i remain market neutral by buying one contract and selling another contract [same spot price obviously] with the same brokerage account?

c.chugani · Sep 9, 2007

Quote from rcanfiel:

Isn't that the same as being flat? To what purpose then?

yeah i know.

but i want to remain IN the market at all times. Then its about timing the exit on both contracts that would determine the profit/loss of a particular trade.

Spectra · Sep 26, 2007

Why would you want to Maximize your risk?

Quote from c.chugani:

yeah i know.

but i want to remain IN the market at all times. Then its about timing the exit on both contracts that would determine the profit/loss of a particular trade.