Spread Trading Strategies
Mastering Risk with Futures Spread Trading:
A Strategy for Every Trader
Futures spread trading is a nuanced strategy that capitalizes on the price differences between various contracts, offering a way to reduce risk and increase profit potential. By incorporating seasonality, traders can leverage predictable patterns in commodities, aligning their positions with historical trends and market dynamics. This approach not only enhances risk management but also opens up unique opportunities for both seasoned and novice traders, making it a valuable tool in the modern trading landscape.
Spreads Explained:
What makes Futures Spread Trading such a profitable and easy way to trade?
- Spreads can considerably lessen the risk in trading compared with straight futures trading. Every spread is a hedge. Trading the difference between two contracts in an intramarket spread results in much lower risk to the trader.
- Spreads on futures normally require lower margins than any other form of trading, even lower than the margin requirements for option trading. The result is much greater efficiency in the use of your capital. It is not unusual to be able to trade 10 spreads putting up the same amount of margin as required for 1 outright futures position.
- Spread trades are less volatile than other forms of trading. They are considerably less volatile than share trading, option trading, or straight futures trading. In fact, it is because of such low volatility that margins for spreads are so low.
- Spreads typically trend more often, more steeply, and for a longer time than do other forms of trading. Since "the trend is your friend," spread trading is friendlier. Spreads trend because of something real taking place in the underlying fundamentals. They are not moved by market makers and market movers, who push markets to run the stops.
- Spreads create a more level playing field. Because there are no stops possible, spread trading is a purer form of trading.
- Spreads avoid problems associated with a lack of liquidity. You can trade in less liquid markets. Since you can trade where there is less liquidity, you have more trading opportunities than when not trading spreads.
- There is less concern with slippage. Spreads require less precise entries. Getting an exact fill becomes less important. Sadly, the whole truth of the benefits of spread trading has been kept secret from the public.
- Spreads in certain situations offer greater odds of winning, but never greater probabilities of losing
- Spreads are an excellent way to trade seasonal tendencies. When traded seasonally, the percentage of wins against losses is high.
- Spreads enable you to take advantage of inverted markets. When a market is inverted, you have two possibilities to take profits – once when prices inverts, and again when prices return to a normal progression.
How can Traders Notebook help you to become a better Spread Trader?
Traders Notebook is THE premier source for spread trading education, and Andy stands out as THE expert in the field. With Traders Notebook, you'll delve into trades with the highest probabilities for success, accompanied by a comprehensive trading plan (risk, stop loss, targets). For each topic, Andy will clearly explain the principles and strategies, ensuring you understand the rationale behind successful spread trading. Additionally, you'll receive access to our Telegram Group for three months, allowing you to trade alongside a professional!
Questions and Answers
What markets do you trade?
We trade all the liquid US commodities such as Wheat, Corn, Soybeans, Meats, Sugar, Crude Oil, just to name a few.
What size of trading account do you recommend?
We usually recommend a trading account of at least $20,000 to follow all our trading ideas.
What platform do you use for teaching?
We can use Skype or Zoom, whichever platform you prefer.
Can you tell me more about the strategies you are using?
We focus mainly on seasonal trades with a high probability of success. Some of the seasonal spreads we are trading have a success rate of 100% over the last 15 years. It does not, of course, mean the same strategy will work in the future, but with adequate trade management together with good risk management, we guide the success rate in our favor.
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