/NG-/HH spread trading

[tradeking007yahoo]

Fortunately I have a long list of clients over a twelve year period who disagree with you. Spread trading does not amplify risk. Just like typing in all CAPS doesn't make your point any more relevant or honest.

fortunately I have an even longer list of winning outright trades where
1. i know my exact risk in 1 mkt because i can set a stop in 1 mkt and guess what i will not
1. get a double fill (spreads)
2. not get filled get legged or get hung
3. i don't need to worry about slop
4. i work with hft not against or compete
5. low fees almost half compared to spreads
6. 50 to 60 % more potetnial per trade due to being on 1 side not both
7. demo accounts in outrights are way more accurate. NO ONE who actual trades spreads will
tell you yes practice spreads in demo because it is night and day.

YOU DO YOU and i will do me.

 

[bone]

You're not really making much sense at all. Most of the traders blowing out at futures brokers and clearing firms are trading outrights. It's a matter of numbers and participation.

again there is a lot of risk in spreads especially when you can trade them with low margin why do you think they offer low margin? ha
https://www.bloomberg.com/news/arti...ural-gas-trade-collapses-on-warm-fall-weather

 

[tradeking007yahoo]

You know who took the other side of Hunter's trade? John Arnold (Centaurus)

NOT YOU! and guess what he retired right after!! why? because it was all manipulated!! duh

 

[bone]

There is no "legging risk" or "risk of getting hung" or "double fills" with exchange supported spreads. HFT and Algos have nothing to do with exchange supported spreads because their orders at regulated futures exchanges by rule are tagged as "conditional" and the exchange requires "firm" orders for the exchange algorithm to internally match orders.

We swing trade spreads, we don't day trade them. My clients pay far less in commissions and exchange fees than they ever did scalping and day trading.

 

[tradeking007yahoo]

they are called IMPLIED SPREADS... so let me get this straight you are teaching how to trade implied and calendar spreads.. say it aint so..please for 7,000 dollars..

ae we done bone? agree to disagree?

 

[tradeking007yahoo]

you think one thing i thinkn one thing it makes a mkt. the more spreaders the merrier for me because i can trade 10 x the rallies and dips. sure spreads can flaten out volatility but for me and most traders that is what we live and die off of those short term inefficiencies. buying dips and selling rallies.

Good luck. i am not saying you are not a great teacher i have no idea.

 

[heispark]

https://www.e-education.psu.edu/ebf301/node/548

 

[bone]

Very good explanation in the video for the financially cleared Swaps. I would just note that the HH contract is financially settled before the Nymex first notice day for physical delivery of the NG contract - so that spread you are referring to is essentially a future on the pipeline basis during the first week of every month. At least, that’s my current understanding after looking at the HH contract today.

I’ve never traded HH, but I’ve traded the Clearport and ICE NG Swaps and of course currently I trade the NG intra market spreads.

https://www.e-education.psu.edu/ebf301/node/548

 

[feyri]

NYMEX HH, NYMEX NN, ICE NG LD1 Henry, and ICE NG LD1 ICE Lots Henry are all financially settled vs the NYMEX NG final trading day settlement price. The only difference between the products (other than exchanges) is contract size. NYMEX HH is 10,000 MMbtu/month, NYMEX NN and ICE NG LD1 Henry are both 2,500 MMBtu/day and ICE NG LD1 ICE Lots Henry are 2,500 MMBtu/month. While NYMEX NN, the 'ICE look-a-like' used to trade it rarely has active markets now.

As such the NG-HH spread represents the physical delivery premium. This spread for the last several years has been around 1c/10 NG ticks but has deviated at times especially in the last few days of trading where in recent months there have been some much wider divergences. As stated previously the NG-HH spread trades in quarter ticks, or $0.00025 which is $2.50 per contract.

NYMEX HP, NYMEX QG, ICE NG Pen Henry, and ICE NG Pen ICE lots Henry are all financially settled vs the NYMEX NG settlement price on the day prior to the final trading day. This is also options expiration day. The only difference between the products (other than exchanges) is contract size. NYMEX HP is 10,000 MMbtu/month, NYMEX QG and ICE NG Pen ICE lots Henry are both 2,500 MMBtu/month and ICE NG Pen Henry is 2,500 MMBtu/day. NYMEX QG is obviously the eMini.

NYMEX list NG-HP spreads and HP-HH spreads but these are far less liquid than NG-HH.

Should be noted that the ICE products are fungible. If you Trading 1 lot or 2500 MMBtu/day of the ICE NG LD1 Henry for Jan21, what will actually hit your account is actually 31 lots, or 1 lot/day, of the 2500 MMbtu contracts. This also creates the interesting situation that an F/G spread, actually creates an outright position, since the number of days in each month is different! This can cause problems in fast markets as the anchor prices can be off-market, and hence the price of the outright delta can buy or sell can also be off-market.

Regarding the new(er) Clearport front end, I believe you will find that the contracts traded are not only the same products, but Clearport uses the same Globex matching engine. Most (if not all) Cleared Swaps in the Energy industry are long gone.

 

[bone]

Great post and very informative - thanks for this.

The only thing I would add is that if you are trading the Nymex Clearport or ICE-LCH financially settled swaps - it will require considerably more margin than you are accustomed to with CME NG futures. And a discount broker is likely not going to be able to accommodate you. Just my own opinion, I wish everyone good fortune !

NYMEX HH, NYMEX NN, ICE NG LD1 Henry, and ICE NG LD1 ICE Lots Henry are all financially settled vs the NYMEX NG final trading day settlement price. The only difference between the products (other than exchanges) is contract size. NYMEX HH is 10,000 MMbtu/month, NYMEX NN and ICE NG LD1 Henry are both 2,500 MMBtu/day and ICE NG LD1 ICE Lots Henry are 2,500 MMBtu/month. While NYMEX NN, the 'ICE look-a-like' used to trade it rarely has active markets now.

As such the NG-HH spread represents the physical delivery premium. This spread for the last several years has been around 1c/10 NG ticks but has deviated at times especially in the last few days of trading where in recent months there have been some much wider divergences. As stated previously the NG-HH spread trades in quarter ticks, or $0.00025 which is $2.50 per contract.

NYMEX HP, NYMEX QG, ICE NG Pen Henry, and ICE NG Pen ICE lots Henry are all financially settled vs the NYMEX NG settlement price on the day prior to the final trading day. This is also options expiration day. The only difference between the products (other than exchanges) is contract size. NYMEX HP is 10,000 MMbtu/month, NYMEX QG and ICE NG Pen ICE lots Henry are both 2,500 MMBtu/month and ICE NG Pen Henry is 2,500 MMBtu/day. NYMEX QG is obviously the eMini.

NYMEX list NG-HP spreads and HP-HH spreads but these are far less liquid than NG-HH.

Should be noted that the ICE products are fungible. If you Trading 1 lot or 2500 MMBtu/day of the ICE NG LD1 Henry for Jan21, what will actually hit your account is actually 31 lots, or 1 lot/day, of the 2500 MMbtu contracts. This also creates the interesting situation that an F/G spread, actually creates an outright position, since the number of days in each month is different! This can cause problems in fast markets as the anchor prices can be off-market, and hence the price of the outright delta can buy or sell can also be off-market.

Regarding the new(er) Clearport front end, I believe you will find that the contracts traded are not only the same products, but Clearport uses the same Globex matching engine. Most (if not all) Cleared Swaps in the Energy industry are long gone.