Spread Trading - an easier way to trade!

J

Joe Ross

Spread Trading

Have you already considered to trade spreads?
They have very low margin requirements and they produce up to 10 times more return on margin than most other trading styles.

Did you know that spread trading is probably the most profitable, yet safest way to trade futures?!

Yes! Spreads are the perfect trading instrument not just for professional traders but also for beginners and traders with small accounts (less than $10,000).

 
most liquid and trending markets of all.
If futures spreads were the holy grail everybody would be doing them only that you have problem with fills reported if you trade grains and multiple ways that the floor will screw you. better stick to the electronic markets only.
I can have a "turtle like", betsize and risk control with uncorrelated contracts in a portfolio and strict ATR based pyramiding.
You can trade like a hedge fund for $10,000 or so. So I like spreads (forex pairs) for a different reason.
With forex pairs you can scale in, scale out, no cost for quotes and charts. Trade for the long term - that's the only way.
I have looked at some software to chart and monitor futures spreads - it is a major headache and expensive as hell!
 
Mr Ross, it's more likely that you could receive an education in spread trading by reading the posts of experienced members on these boards

Apparently you haven't been suitably chastened by the withering sarcasm that was engendered by a similar post of yours to the Wilmott.com forums. If you survive the moderator's shill detection alert, expect a similar drubbing here
 
Most on ET would rather scalp a contract back and forth for pennies rather than make some real money.

Joe, you might address how ED spreads on Globex may be a better way to play rising interest rates - better than simply selling ZB/ZN/GBL.

I need to sit down and pull a plan togethor myself, but am looking to use ED spreads, GBL options, and some ZB/ZN outrights to work a long term bet on rising interest rates.

In fact, ED electronic volume is coming into its own, and IMO this contract & trend is an excellent opportunity for electronic traders to realize the full benefit of spread positioning.

You won't get a lot of interest dicussing the pit-traded contracts - here we be religious (almost) screen traders.

**In case it is not clear, by ED I mean the Eurodollar contracts.
 
Quote from Joe Ross:


They have very low margin requirements and they produce up to 10 times more return on margin than most other trading styles.
More...

im more interested in how much $$$ i ccan make a day than % return on capital ideas

agree that spreads are another tool everyone should consider tho.
 
Dear BlueHorseshoe,

I agree with you that there are better ways to play the interest market than simply selling GBL, ZN, and ZB. I think a combination of spreads, outrights, and options are usually a better way to go when considering the longer term, which the interest rate situation should turn out to be – longer term. But like yourself I haven’t come up with anything complex yet. So far, I’ve been playing the interest rate business tight, by selling T-Note and T-Bond Calls and buying T-Note and T-Bond Puts. The longer end of the yield curve is not so dependent on what the FED does, and interest rates further out are already moving quite nicely higher. Since ED is more closely tied to the T-Bill rate, FED actions affect Eurodollars more than the longer term contracts. If you come up with a great strategy, let me know. :)

JR
 
Interesting posts.

For gold watchers there is kitco.com.

For discussions on forex there is global-view.com.

Where is the best web source of information on interest rate markets? What do you look at (not just the price information) once or more each day to follow the interest rate?

Thank you...
 
Quote from ramora:

Interesting posts.

Where is the best web source of information on interest rate markets? What do you look at (not just the price information) once or more each day to follow the interest rate?

Thank you...
More...

The only place I can think of is the Chicago Board of Trade.
They are the ones who deal the most in interest rates and interest rate futures.

That would be for US interest rates.
For UK it would be the LIFFE
and for Europe it would be Eurex
 
what i dont get is that if rates are rising, shouldnt the ed contract be falling, not rising?

is it because the previous sell off was overdone?

however, if its rising, i should be a buyer, not think about it too much
 
On a strategy for rising interest rates:

My rough plan is to stick with electronic contracts, hence GBL options, ED spreads, ZB/ZN outrights.

First, I be selling GBL calls for income. Second, sell the ED spreads as the core long-term position. Third, scalp ZB/ZN intra-day and overnight, going both long and short on extreme moves.

I think pursuing this kind of position would make for a good journal over the next ~2 years, but doubt I have the time to keep it up.

**Throw in some short JGBs on Simex for diversification. Have to find where JGBs trade electronically ...
 
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