RECAP - 08:46 18-Sep-19
Spread positions tend to be less risky than outright long (buy) or short (sell) positions.
But not all the time. Always remember, it is not 100% full proof.
Mostly WHEAT versus CORN .
But others as well.
This is a demo.
Please read below for understanding.
Money managment is important as well as patience etc...
I follow more or less the spread strategy with the seasonability strategy -
Keith Schap – The Complete Guide to Spread Trading
The guy who spreads and makes a little every day is the one who walks away with
the big money.
–A veteran trader, quoted in
Toepke, Jerry. "Moore Research Center, Inc."
Why Seasonals Work. McGraw-Hill, 14 May 2009. Web. 05 May 2016.
Every time i enter a trade in WHEAT i enter a trade in CORN with the same amount of units.
Trade accordingly your account size.
The trades can last hours, days or weeks.
Patience and discipline and money management. I will not lose more than 65% of the equity.
I can trade every hour or other.
The Intercommodity Spread is a spread between two different , but
in the same delivery month. Often this spread will set-up according to
or occasionally a harvest supply/demand picture.
The Corn-Wheat Spread
The Intercommodity Spread is our focus for today! Specifically, we will analyze
the merits of the Corn-Wheat Spread going into the 1st and 2nd quarter of 2011.
This is a trade that I have monitored since the 80’s. I believe that it was first
notable in the mid 60’s. The beauty of taking a classic trade and reviewing the trends
and history of the trade saves time in research and previous observations may even save
money on potential variances to watch for.
In this particular spread, we note that July may be a strong month for corn as the weather
conditions, plantings acreage, export numbers may still be unknown. The crop is still vulnerable
until toward harvest which is in the fall.
On the other hand, the harvest for the soft red winter wheat may be in July, allowing
the market to regard the saturation of a harvested crop.
One may look at the months; March, July and September contracts for this particular
spread trade and select another, but this is the anatomy of the spread, not to be confused with a trade
As a matter of fact, this spread may be reversed at another time of
June may be a time frame to review the Wheat-Corn Spread. These grains are
both feed product and may also be affected by livestock production trends, global
supply-demand figures, weather conditions and basis for the farmer.
The wheat is
typically a heavier protein cereal, while corn does not vary to the extreme. In modern
times patents on the seeds of varied grains has become big business. The USDA regulates
the delivery, grades and contract size regular for delivery. The seeds and
fertilizers must also endure disease and pests. There are Government Subsidy programs
as well in some cases to control the crops being planted. In recent times, Africa has
been know to lease land for crops to fulfill some of their required grain inventories
in countries such as China.
Technically, it is good to pull up a spread chart to monitor the merit of the potential
move. One may select their Indicators to best confirm an entry.
There is no audio in my videos.
This is a demo . I have a real with oanda.
Trading Commodity Patterns
There is no such thing as a sure thing, but ignoring this chronological behaviour
of and the tools readily available to help predict these patterns is
a mistake for traders.
A knowledgeable broker who is MRCI equipped and spread savvy is a keen idea if you want
to get into trading .
The more tools you utilize within using the approach of trading can help
you in whatever commodity or you wish to trade.
Trading Commodity Patterns
Every calendar year there are different seasons. It is how we plan our lives.
Weather is the first to come to mind, but there are holidays, sports, shopping and
many more that help break up the monotony of our day to day patterns.
The market is no different. Just as you use a calendar to plan and
differentiate Thanksgiving from Opening Day in baseball, you can use the same
calendar to blueprint possibly when wheat futures will be high and copper prices low.
Traders can use these patterns to their advantage because it allows a certain
degree of predictability of future price movements, rather than being bombarded by an
endless stream of often contradictory market noise. Now of course there are other
factors too numerous to list that can affect the markets, but certain conditions
and events reoccur at annual intervals and help traders anticipate where the market is
Although not 100% accurate-as any weatherman will tell you-weather is, in fact,
the chief contributor to trading. The annual cycle from warm to cold
weather and then back again affects all the agricultural commodity markets as their
coincides with the planting and harvesting seasons. However, the
annual weather pattern can stretch its power to all the . For example,
demand for heating oil typically rises as cold weather approaches but subsides as
inventory is filled and decreases even more as the summer months get closer.
The calendar not only gives us climate related seasons, but also the annual
passing of important dates that then creates 'seasons' of its own. The due date for
filing U.S. income taxes is every April 15th. Monetary liquidity may decline as taxes
are paid, but rise as the recirculates funds.
These annual cycles in give rise to the price phenomena or
what we would simply call . This annual pattern of changing conditions may
cause a more or less well-defined annual pattern of price responses. , then,
may be defined as a market's natural rhythm-an established tendency for prices to move
in the same direction around similar time most years.
In a market strongly influenced by annual cycles, price movement tendencies
may become more than just an effect of cause. It can become so ingrained as to
become nearly a fundamental condition in its own right - almost as if the market had a
memory of its own. Why? Once consumers, producers, traders, and the like fall into a
particular pattern, they tend to rely on it-almost to the point of becoming dependent on
it. This dependency can be tricky as such trading patterns do not repeat without fail.
The methodology, as does any other, has its own inherent limitations. For instance
, some summers are hotter and dryer than others thus leading to less of a supply than
what was predicted for the fall. Even trends of exceptional consistency are
best traded with common sense and caution. A basic familiarity with current
fundamentals and a simple technical indicator will help enhance selectivity and timing
of entries and exits.
The Moore Research Center (MRCI) is one of the leaders in assessing these seasons and has
evaluated up to 55 years of history against the market behaviour of current contracts.
This research has been used, and still is, by major exchanges like the , CBOT and
others including hedge funds and traders. They are members and regulated by the Commodity
Trading Commission (CFTC) as a Commodity Trading Advisor (CTA). MRCI presents a
list of fifteen spread trading ideas each month, covering all commodity
sectors: grains, energies, currencies, livestock, etc. Every spread they present has
shown at least an 80 percent historic reliability over 15 years (when available) and
Moore Research provides detailed statistical data for every year the individual spread
has been tracked. Their spread trading cycles last anywhere from a week or so up to
around 3 months. Most of them average about 4-6 weeks. Each spread has a pre-determined
entry and exit date along with a pre-calculated point at which the spread would be exited
if it became a loser. Every spread is updated each day on their web site from the day it
goes on to the day it comes off and their results are recorded. MRCI uses the daily
settlement prices of the market as the values to label their entry and exit prices.
There is no such thing as a sure thing, but ignoring this chronological behaviour of
and the tools readily available to help predict these patterns is a mistake
for traders. A knowledgeable broker who is MRCI equipped and spread savvy is a
keen idea if you want to get into trading . The more tools you utilize
within using the approach of trading can help you in whatever commodity or
you wish to trade.
Toepke, Jerry. "Moore Research Center, Inc." Why Seasonals Work. McGraw-Hill, 14 May 2009. Web. 05 May 2016.
* Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.
** TENDENCIES ARE A COMPOSITE OF SOME OF THE MORE CONSISTENT COMMODITY SEASONALS THAT HAVE OCCURRED OVER THE PAST 15 YEARS. THERE ARE USUALLY UNDERLYING FUNDAMENTAL CIRCUMSTANCES THAT OCCUR ANNUALLY THAT TEND TO CAUSE THE MARKETS TO REACT IN A SIMILAR DIRECTIONAL MANNER DURING A CERTAIN CALENDAR PERIOD OF THE YEAR. EVEN IF A TENDENCY OCCURS IN THE FUTURE, IT MAY NOT RESULT IN A PROFITABLE TRANSACTION AS FEES, AND THE TIMING OF THE ENTRY AND LIQUIDATION MAY IMPACT ON THE RESULTS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT HAS IN THE PAST OR WILL IN THE FUTURE ACHIEVE PROFITS UTILIZING THESE STRATEGIES. NO REPRESENTATION IS BEING MADE THAT PRICE PATTERNS WILL RECUR IN THE FUTURE.
The inverse correlation GOLD vs OIL 08:10 05-Sep-19
Gold can be used for speculation but is preferred as a safe haven. Crude,
on the other hand, can be used as a store of value but is preferred as a
This combination makes these two assets work great together as mutual hedges.
Gold helps offset the risk of higher uncertainty, while oil can take advantage of
Broadly speaking, you could say that gold and petroleum are inversely correlated.
There are a couple of major caveats to add to that notion. The first is that more
nuance allows for more sophisticated trading. The second is that there is more to
oil prices than just the market.
Understanding Intermarket Spreads: Platinum and Gold
Basics of Spread Trading
March 5, 2011 by Craig Turner
Forex basket Trade the NEWS :
For most new traders, the biggest challenge is getting a profitable strategy that works
for the long term. Usually, trend-following systems are favored because they tend to have
a very good risk-to-reward ratio. Trading the currency market is essentially a numbers
game, basically traders look for strategies or systems that have a positive overall
yield. The profit factor of any strategy is also very essential, because a profitable
strategy should make more money or pips, than it loses. After some extensive research,
I have discovered one of such systems. This strategy is built on one of the oldest
trading adages around; “cut your losses early and let your profits run”
and “the trend is your friend”.
Basket trading involves opening a series of correlated or uncorrelated trades, and after
an adequate amount of time, closing the trades when the overall sum of the trades
is positive i.e. when the net value of all open trades is positive or close to our
It is not 100% guarantee.
The Trading setup
The truth behind the Forex market is that currencies trend. This means that currencies
have a tendency to keep gaining or diminishing over a long period of time. There are a lot
of concepts about trading cycles and swings, but in reality if we were to zoom out of
our charts we would notice a very obvious and unmistakable trend direction. Basket trading
involves gauging the potential strength or weakness of a pair, and placing several trades
that align with that analysis.
Key Reports/Factors that Move FX Markets
Any world events /news
Financial crises and elections create financial uncertainty and, in turn, impact value
of a country’s currency
announcements Will affect size/growth rate of a
nation’s money supply and, in turn, interest rates; can include key interest rate
changes, buying/selling government bonds, reserve requirements changes
FOMC (Federal Open Markets Committee)
Meets 8 times a year to set U.S. and key interest rate changes;
impacts value of U.S. dollar, world’s reserve currency
U.S. Dollar Index
Measures the value of U.S. dollar relative to a basket of currencies for the
U.S.’s most significant trading partners