The top 3 guys who make over 1 million a year at my firm...

Quote from actionzip54:

I'd be cautious to call this guy a successful spreader.
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People naively believe that spreading is a no risk, easy profitable trading business.

Then sooner or later the spread turns ugly and you get hit by the maximum on both sides of the spread, leaving you with huge, huge losses.
 
Quote from xelite777:

People naively believe that spreading is a no risk, easy profitable trading business.

Then sooner or later the spread turns ugly and you get hit by the maximum on both sides of the spread, leaving you with huge, huge losses.
More...

spreading does not mean letting go to risk management... and more importantly, common sense... so you are making an assumption based on your own bias and possibly past failures/mistakes about what others believe.
 
Quote from ofthomas:

spreading does not mean letting go to risk management... and more importantly, common sense... so you are making an assumption based on your own bias and possibly past failures/mistakes about what others believe.
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What about someone who goes long a stock that goes to zero overnight, and short a stock that goes to "infinity" over night? Or just 100% and 50% changes with 20:1 leverage?

I think your spreads prevent it from happening, but not everyone is as wise/thoughtful as you. So the concept of spreading could be extremely dangerous or safer depending on who is using what.

I would not be surprised if some prop firms were to allow spreading only in a pre-approved list of stocks, and/or no overnight holding.
 
Quote from tradingjournals:

What about someone who goes long a stock that goes to zero overnight, and short a stock that goes to "infinity" over night? Or just 100% and 50% changes with 20:1 leverage?

I think your spreads prevent it from happening, but not everyone is as wise/thoughtful as you. So the concept of spreading could be extremely dangerous or safer depending on who is using what.

I would not be surprised if some prop firms were to allow spreading only in a pre-approved list of stocks.
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interesting, the whole "going to 0" thing... well, like i said before... common sense... and i don't know about props, am not one... but even then... common sense...
 
Quote from ofthomas:

spreading does not mean letting go to risk management... and more importantly, common sense... so you are making an assumption based on your own bias and possibly past failures/mistakes about what others believe.
More...

this guy knows whats up
 
Quote from ofthomas:

spreading does not mean letting go to risk management... and more importantly, common sense... so you are making an assumption based on your own bias and possibly past failures/mistakes about what others believe.
More...

You open a commodity spread on Monday.

On Tuesday (and the next 3 days), your oh-so-conservative-low-risk commodity spread is locked limit down/up.

You lose a fortune on both side and your little stops are wortless.

Time to sing the Blues.

http://www.youtube.com/watch?v=3_FFQ1BZnik
 
Quote from xelite777:

You open a commodity spread on Monday.

On Tuesday (and the next 3 days), your oh-so-conservative-low-risk commodity spread is locked limit down/up.

You lose a fortune on both side and your little stops are wortless.

Time to sing the Blues.

http://www.youtube.com/watch?v=3_FFQ1BZnik
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unless it gapped on both legs your stops would have been hit, no? Couldn't that be avoided by using price activated market orders? Hedge trades?
 
Quote from xelite777:

You open a commodity spread on Monday.

On Tuesday (and the next 3 days), your oh-so-conservative-low-risk commodity spread is locked limit down/up.

You lose a fortune on both side and your little stops are wortless.

Time to sing the Blues.

http://www.youtube.com/watch?v=3_FFQ1BZnik
More...

i think you should read carefully what you are stating and you will see the flaw in your assumption, and therefore your statement...

the risk to which you are referring to exists on inter mainly ... for intra, exchange based continue to trade (that has been my personal experience at least) ...

still in inter's, it can be avoided... by knowing in advance when important reports are being published and either hedge or offset your position before the relevant news, watching your spread leading to the news, knowing its normal trading range and seen if going outside of it leading to the news, etc it all can help protect the trading capital...

i am not saying anything new, it is all common sense things that one can do... after all, spread trading isn't day trading...at least not for me...
 
Quote from trade_canada:

unless it gapped on both legs your stops would have been hit, no? Couldn't that be avoided by using price activated market orders? Hedge trades?
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nope.... limit down/up will more than likely have blown through those stops... all offer/bids would have probably been pulled, so you assume price traded through you when that is not always the case...
 
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