Spread Trading Software

T

Trader922

For those of you trading spreads what order entry software are you using? Any positives or negatives about it?

I am currently entering spreads using RAN but am not too thrilled with it as manually calculating equity spreads based on bid & ask seems to be very error prone.

I have heard good things about CQG but would like some other opinions as well. Also, FWIW I am looking at these platforms with the intent of trading spreads off of daily charts, so I am not sure that I need to spend the $$ for XTrader Pro.

Thanks,
Eric
 
xstudy (tt) allows you to show charts using bid to bid or ask to ask prices. i much prefer this over last to last (which is what you find on most charting apps). the bid to bid or ask to ask is more representative of what scalpers are liable to trade as we only trade when we have an edge on at least one leg. when trading in the pits, you lean on the market you know you can get and bid / offer out the other side depending on whether you're leading on a bid or offer. therefore, you're leaning on a bid (so you may sell it when needed) and bidding on the other leg.
 
Currently I am trading mostly calendar spreads-grains, energy, etc.

I am looking at doing some more equity spreads in energies & grains such as crude vs. heating oil or crude vs. gasoline or bean oil vs. soybeans etc.

The equity spreads is what is causing me to re-think the order entry platform. It looks like there is a lot of opportunities in spreads, but just some headaches to sort out because of some of the seemingly simple issues like order entry & data for the spreads.

Regards,
Eric
 
Coveredcall - Thanks for the insight. I am not sure I totally understand what you mean.

I understand the part about one side of the spread being easier to get into/work than the other and how looking at the last to last price can be very deceiving, mainly because the more illiquid leg could have not traded for the last hour and the bid & ask are much higher or lower than when it traded last.

I dont understand exactly what you mean by leaning on one side. Can you explain further?

Thanks,
Eric
 
Consider this scenario:

You're trading the GEZ8/GEH9 spread.

GEZ8 is 9657.5 bid on 500 contracts with 100 contracts offered at 9658.0.
GEH9 is 9638.5 bid on 450 contracts with 500 contracts offered at 9639.0.

This implies a spread market of 18.5 bid on 500 with 100 offered at 19.5.

You wish to sell the spread. You're pretty sure you can sell GEZ9 at 9657.5 (since it's bid there 500 times) so you can 'lean' on that bid. As long as GEZ9 is 9657.5 bid on 500, you're willing to join the bid on GEH9 (you bid 9638.5). If you get hit on your bid (buy GEH9 at 9638.5) you can now sell GEZ8 at 9657.5 thereby selling the spread at 19. If you has simply sold the spread in the legs, you would have sold it at 18.5. By leaning on the bid, you picked up an extra 1/2 tick.
 
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