Ever wondered what exactly is future spread trading , and how you or any investor can optimize their profits in future trading ??
here is the answers…
What is Future Spread Trading ??
Futures spread trading is probably the most profitable, yet safest way to trade futures. Almost every professional trader uses spreads to optimize his profits
Trading spreads offers many advantages which make it the perfect trading instrument, especially for beginners and traders with small accounts
Four Advantages of Futures Spread Trading
Easy to trade
Whether you are a beginner or an experienced trader, whether you use chart formations or indicators, the existence of a trend is obvious. Spreads tend to trend much more dramatically than outright futures contracts. They trend without the interference and noise caused by computerized trading, scalpers, and market movers.
Low Margin requirements
Many spreads have reduced margin requirements, which means that you can afford to put on more positions. That’s a great advantage for traders with a small account. With a $10,000 trading account risking 8% of your account, you can enter 6 corn spreads, instead of only 1-2 outright corn futures trade, which turn out to be advantageous for leverages
Higher return on margin
Each point in the spread carries the same value as each point in the outright futures. However, the difference in return on margin is extraordinary.
And keep in mind that you can trade 6 times as many spread contracts as you can outright futures contracts. In our example you would achieve a 24 times higher return on you margin.
Low time requirements
You don’t have to watch a spread all day long. You do not need real-time data. The most effective way to trade spreads is using end-of-day data. Therefore, spread trading is the best way to trade if you do not want to watch or cannot watch your computer all day long (i.e. because you have a daytime job). And you can save all the money you would have had to spend for real-time data systems
irisha says
I recommend the book Futures Spreads author Perchanok (on Amazon)