Staying Power

[bone]

I started my trading career as an independent local in the early 90's scalping 30 year Treasury Bonds in the CBOT pit. Several months into things, I found myself buying three or four rounds of drinks for a table of floor brokers at the Ceres restaurant in the lobby. To a man, after sufficient lubrication they all suggested I learn to spread trade if I wanted to last in the business. And so there you have it.

Staying Power in a trading system makes or breaks a trader. It is so easy to get shaken out of a trade. Happens all the time. Exploring spread trade combinations (either intermarket or intramarket forward curve) can provide a world of opportunities and flexibility that you just don't find trading a singular flat price instrument.

Take a look at the market action comparisons between flat price CL (blue/lavender bars) and a CL intramarket butterfly and a CL intramarket condor (both red/green candles):

 

[bone]

Note how these forward curve combinations (away from the prompt months) tend to hold a trend to greater degree and exhibit less volatility and choppiness as compared to the flat price prompt month futures contract.

 

[java]

That's why I like spreads, lot's of staying power. I like to trade that wheat calendar vs the corn calendar. I leg into everything and am often net long or short. I've had 3 out of the four legs moving against me all this week.

 

[bone]

yeah,That's why I like spreads, lot's of staying power. I like to trade that wheat calendar vs the corn calendar. I leg into everything and am often net long or short. I've had 3 out of the four legs moving against me all this week.

I can't do that with clients - gotta keep 'em green.

 

[java]

I like wheat vs corn. Both contracts are about the same value so I can trade 1:1. They are correlated and if supply is tight can be substituted. But they are not what I would call closely correlated like a calendar is most of the time. Just loose enough for me. I trade the same months the same way all the time so sometimes I am long new crop and sometimes I am long the front month.