Seasonal spreads

stu........., I have hard time addressing you by your assumed name, could you elaborate why you think the named brokers are better than IB. I follow MCRI guidelines and by using only electronic orders I am missing out on some trades with IB but otherwise I am pretty satisfied and, as hrokling has demonstrated, can be pretty profitable.

Even if there are better brokers for commodities trading I would not give up the advantage I have with IB by being able to cross margin several different system. Commodities, at the present time, actually comprise the smallest part of my trading systems. I do option credit spreads on stocks and stock indexes, a futures swing trading system with 5 different futures contracts, a simple stock trading system based on oversold conditions and a long-term forex trading system based on 11 currency pairs designed to capture the carry interest. The only problem I can see is that you could easily over- leverage yourself if you are not careful, especially now with the new portfolio margins offered. It would be hard to find a broker where you can conveniently trade all those systems on one platform at those low commission rates and with a broker with such strong financial statements.
 
One more thing, can you name a broker who pays generous interests on the credit received from your option credit spreads - you don't have to go through the hassle of buying T-bills.

Why do I like to trade as many different systems as possible? As the Nobel laureate Harry markowitz has proved mathematically, the only way to reduce risk at a desired return level or to increase return on a desired risk level is through diversification.
 
Could someone tell me how do you know the margin required for a particular spread on IB platform. Thnaks in advance.
 
Quote from kahai:

stu........., I have hard time addressing you by your assumed name, could you elaborate why you think the named brokers are better than IB. I follow MCRI guidelines and by using only electronic orders I am missing out on some trades with IB but otherwise I am pretty satisfied and, as hrokling has demonstrated, can be pretty profitable.
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Just thought that a more experienced broker might be able to work your orders a little to improve your cost basis. IB's history with commodities is a little short, plus it sounds like there is a lack of transparency from some of the posts on here. And an experienced broker would allow you to trade around delivery day and not get hit with a car of pork bellies:p
 
Quote from kahai:

That made me look at my RB Aug 07/HO Aug 07 spread where I am sitting on a $2,000 profit (avg. profit 1148) but since the chart looks good and since there were two years where it reached almost $4,000 I am staying in a little bit longer. That should compensate me for a relatively (hopefully) small loss in the HE Oct 07/Feb 08 which I am supposed to close on 7/9.

I used to have some money with a CTA who did nothing but trading lean hogs and had fantastic returns in 2005 and 2006 but pretty much stopped trading this year saying this market had turned upside down.
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Hope the RB/HO spread works out, I had to skip several energy-spreads because of account size and correlation.

The swift exit in RB yesterday was tremendously lucky, looking at the chart it definitely was lifted from me at the peak of the move.

I'm planning to look more into Lean Hogs and Meats in general this fall, it's not part of my trading plan so far - but I gather that it does offer tremendous opportunities. There is however a question of the liquidity in electronic trading - is this doable without going with pit orders?
 
Quote from stupididiot:
Nice journal. IB may not be the best broker to implement spread trades. Maybe Alaron, Man or RJO.

Just thought that a more experienced broker might be able to work your orders a little to improve your cost basis. IB's history with commodities is a little short, plus it sounds like there is a lack of transparency from some of the posts on here. And an experienced broker would allow you to trade around delivery day and not get hit with a car of pork bellies.
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I definitely prefer entering with limit-orders electronically, as long as the contracts are somewhat active the pros outweigh the cons. But if you're talking about illiquid backmonths far out, I can believe there to be advantages to using a pit-broker as well.

I've started looking at/for brokers offering pit-trading (spread brokers) as I've sniffed around on crush and crack spreads etc. However, the preferred option would be with Autospreader from TT or Eccospreader - although the platform cost would be so high that I'd have to be pretty serious about it. Or if someone could get a decent spreading front-end for IBKR... I wish :)

As for delivery, it's kind of unclear - I did an experiment several days after First Notice day on Soybean Meals and did an intraday trade which supposedly was not possible with IB. However, I probably couldn't have held it overnight without getting into trouble with them.
 
Quote from alp168:
Could someone tell me how do you know the margin required for a particular spread on IB platform. Thnaks in advance.
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IB uses the same SPAN margin requirements as the exchanges require, so (for spreads) you have to look it up on the exchange websites - find the products and look for margin. It's not always that easy to understand though, I struggle myself.

For a simple position, say you want to buy a contract of Corn and that's it, IB has outright margin requirements listed on their website.
 
Our company has used man financial from the start and have never had a problem with our orders getting filled. We trade a lot in the pits and have still had good luck with them. Sorry to hear about your bad experience with them. As for trading the meats electronically I would not advise that. The meats are one of the last hold outs of pit trading and over 90% of the volume is done on the floor. I would send the orders down to the pits especially if you are thinking about doing spread orders.
 
Quote from kahai:

Thanks for the reply hrokling.
It might be a dumb question, but does that mean you sent the CC order to the floor through IB (I have never done that so far) and if so do you get good and fast execution? Did you subscribe to their floor based market data? If one enters a spread electronically can one exit through a floor order and vice versa?

Sorry for all the question, take your time, I know you are busy with your stock trading.

It seems so far I have beginners luck with mcri. I entered 3 spreads electronically and one, the CAD Sept. 07/ AUD Sept. 07, which by the way I entered prematurely on 5/23 versus the suggested 5/25 date shows presently a profit of about $1,300. Now comes the difficult part: taking profit or letting it run till the suggested 6/28 date, the average profit for the last 15 years was $1,423. For the time being I try to be disciplined and let it run.

Good luck to you too.
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Thanks to hrokling for a very educational thread. Kahai I noticed you are subscribing to MRCI. I was thinking of subscribing also. However, i was a bit confused when I went to the website. Should I subscribe to the online site only? Do you get everything you need from the online content?

Thank you for any help you may provide,


Cokes
 
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