iCharts Discussions

[welgro]

Intermarket Spreads

An Intermarket spread can be accomplished by going long futures in one market,and short futures of the same month in another market. For example: Short MayWheat and Long May Soybeans.

Intermarket spreads can become calendar spreads by using long and short futures indifferent markets and in different months.

Note : I am very New in Spread Trading.Calls Updates only for Learning purpose. Dont try to took trade as per this basis. Once Get good knowlage about this system then we will try real trade...

All updates only " PAPER TRADE"

[welgro]

Position will square off at 3:15PM.

[welgro]

POSITION CLOSED

[shekharinvest]

You seem to have chosen idea/rcom randomly. What is the price co-relation between them ? Moreover, Spread trades are not meant for Intraday trading.

For Intermarket spreads a good price co-relation is the first and the foremost requirement between the two stocks/commodities, once we establish the co-relation, any deviation from the average is exploited to make profit.

I would suggest you to go thru the thread " Spread Trading - A Simple Trading Strategy for Maximizing Your Profits " by iGURU in another popular forum.

As per my understanding this strategy is more suitable for commodities, since I don't trade commodities I have never pursued it.

Happy Trading !
SHEKHAR

[amitagg]

[welgro]

shekharinvest , Thanks for your valuable suggestion.Just now i try to this method in PAPER TRADE.

After some months trading i will get drawdown % and conciliation experience about this system,if its really give good return,i will try to take real trades.Other wise i will get good experience.

[welgro]

Edward Dobson - Understanding Spreads

[welgro]

MCX ZINC LEAD ~ SPREAD

[welgro]

Statistical Arbitrage/Pair Trading System

The Statistical Arbitrage/Pair Trading System is a market neutral trading strategy enabling traders to profit from virtually any market conditions: uptrend, downtrend, or sideways movement. This strategy is categorized as a statistical arbitrage and convergence trading strategy. The pair trading was pioneered by Gerry Bamberger and later led by Nunzio Tartaglias quantitative group at Morgan Stanley in the 1980s.

The strategy monitors performance of two historically correlated securities eg Bajaj auto-Hero Honda, Lead- Zinc. When the correlation between the two securities temporarily weakens, i.e. one stock moves up while the other moves down, the pairs trade would be to short the outperforming stock and to long the underperforming one, betting that the "spread" between the two would eventually converge. The divergence within a pair can be caused by temporary supply/demand changes, large buy/sell orders for one security, reaction for important news about one of the companies, and so on. A profit situation arising from pricing inefficiencies between securities. Investors identify the arbitrage situation through mathematical modelling techniques The strategy of matching a long position with a short position in two stocks of the same sector. This creates a hedge against the sector and the overall market that the two stocks are in. The hedge created is essentially a bet that you are placing on the two stocks; the stock you are long in versus the stock you are short in.

What makes Spread Trading such a profitable and easy way to trade?

• There is no stop when trading spreads. It is not possible to use stops in a spread trade. Because you are long in one market and short in another, you have become invisible to and immune to "stop fishing."

• Spreads can considerably reduces 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 requires much 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 much 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 better form of trading.

To pair trade we have formulated the following indicators
- StdDev - the measurement standard deviation correlated pairs
- Spread - measurement difference is correlated pairs
- Stochastic - value for differences Stochastic Oscillator correlated pairs


Standard deviation:



We measure the standard deviation of price (close) of correlated pairs and the difference then is displayed as a curve. The price usually varies within certain limits, and these limits movement just counting. Once the price gets out, so it easily and close the sale of usable after returning to the mean . Ideal trade then means to enter somewhere at 2s. Indi implements the first entry before 2s and then according to the statistics less frequent values by percentiles (adjustable), mostly based on the value of 2.5s and 3.5s where already such a motion, at least.

THANKS TO : [CONTENT REMOVED BY ADMIN]

[anand512]

sir
is there any strategy for BTST and STBT trades
pl. explain it.

[welgro]

SPREAD ~ UNIONBANK-SBIN

POSITION CREATED AT 9.15am... PLAN TO CLOSE POSITION AT 3.15 pm

[SwingTrader]

Welgro,

Be careful NOT to post any external references here in the forum. We have removed a reference in your today's earlier post. I urge you to thoroughly check what you are posting here before you submit it in the forum.

Thanks.

[welgro]

Dear SwingTrader,

I cannot get you, How to update strategy article with out author info.

may be its not big issue,I am not provide any url's

any way its wrong ?(updates author info with out url),

Then how to discuss about the strategy with some other article ?...

[welgro]

UNIONBANK ~ SBIN

update 2.30 PM

[welgro]

12/09/2014 (RCOM -IDEA ) SPREAD TRADE END WITH = 3800 LOSS

But Today (9.15 AM) if i took the same position ? Made profit : 9200 !!!