Spread Trading

[PitBull]

Mitesh , the spread should have been taken at close yesterday or early today at around 9.75 - 11. That spread would have already shown profits.

You can still take it but the profit will be limited to ~ 3.55 unless it crosses 16.
If you do take it, keep a close eye on it and set a stop loss of 1.2.

If its any consolation, I missed the buy last night too. I got out of my previous spread but did not reverse.

 

[PitBull]

Dear PitBull,

Good Posting & Replies to Members Queries. I have one thing to know about Spread.... I read about GOLD - SILVER spread....Do you have idea that what size GOLD and SILVER to create an SPREAD POSITION. As in ZINC - LEAD we do ONE ONE LOT of each ....but in GOLD - SILVER I dont know how it works as it have different Lot size as well different Expiry Dates. Glad to have your input.

Gold - Silver does not correlate very well. You can try calendar spreads in gold or in silver. I did a little analysis on this when I started analyzing Lead-Zinc but didn't concentrate on it too much.
Maybe one of these days I will start it again.

 

[Mietesh]

PitBull,

Thanks for your reply. But actually you didnt got my point, I meant to ask you is that if One can make BULL Spread (Buy Zinc Sell Lead) Positioin at this Spread Gap of Rs.13.50 or not ? As your reply says that I missed Bus to create position of Bear Spread but what about Bull Spread at this Level. If any insight you can give then pls reply soon, so i dont miss another Bus.

Rgds MIETESH.

 

[PitBull]

No, too early.
If you follow my method , you have to see the spread gap change two days in a row to enter a trade.

 

[Mietesh]

Pitbull

Actually you didnt noticed i suppose, but this is THIRD day in a row for Spread Gap to rise.......4th = 8.90 6th = 10.55 7th = 13.20. So now as per your method what to do.....which Spread can be created ? My View is that one can create BULL SPREAD. Do Inform your view pls before market open tomorrow.

Rgds Mitesh.

 

[Amigo]

Pitbull,
Thanks to you and iGuru for teaching this great method to us. i took bear spread last night and today curbed my desire to book profit. Hope you will continue to guide us for a couple of trades more , till we are confident enough.

Amigo

P.S. what are your views reagarding intramarket spreads. Did you try that also. Today June Copper and Aug Copper were trading 5 points apart. Can intramarket spread be initiated in Copper?

 

[PitBull]

Pitbull

Actually you didnt noticed i suppose, but this is THIRD day in a row for Spread Gap to rise.......4th = 8.90 6th = 10.55 7th = 13.20. So now as per your method what to do.....which Spread can be created ? My View is that one can create BULL SPREAD. Do Inform your view pls before market open tomorrow.

Rgds Mitesh.

I already posted my view in this post

The trade now would be go Long Lead, Short Zinc, but the spread is now at 13.2 and I am expecting it to increase to a maximum of 16, probably a bit less.
So the profit will be less from this trade and your risk is still the same.
Your call.

I can't tell you when to trade. I am not a financial advisor. I am just here learning from others as you are.

Since you are hesitant on this, I would suggest you paper trade for a while and then go in with real money if you think the method works and feel free to let us know any improvements you may have.

 

[PitBull]

Pitbull,
Thanks to you and iGuru for teaching this great method to us. i took bear spread last night and today curbed my desire to book profit. Hope you will continue to guide us for a couple of trades more , till we are confident enough.

Amigo

P.S. what are your views reagarding intramarket spreads. Did you try that also. Today June Copper and Aug Copper were trading 5 points apart. Can intramarket spread be initiated in Copper?

Amigo , I am also learning as we go along. My biggest problem with this strategy is I can only exit after 2 days of loss or after 1.2 points of loss.
I have to give away part of my profit before I get an exit signal.

With regards to the intramarket spreads, I am not following copper but there should be a cost of carry involved between two months which is the price of holding and storage for a month.
You can sometimes get a trade opportunity which is risk free on this type of spread.
I will post more about this later.

 

[sumeetsj]

The method taught by iGuru is simple and great. But have my own findings,

1. The spread gap in Lead-Zinc enables us to take a decision as to which spread to take.
2. But we have to do a back test on upto minimum 1 year of data to understand where to take a position.
3. Simply if the spread gap increases after taking a trade then u have to bear m2m margins
4. If the spread gap remains the same then u have to wait

These findings make Lead-Zinc spread trades less probability trades and hence less feasible.

 

[sumeetsj]

Whereas taking trades in Gold/Silver,
Calendar spreads proves much more profitable,
taking into consideration the moves and the volatility in Silver.

I have been successfully implementing calendar strategies in Gold and Silver and gaining consistently.