International Futures Group - An Online Commodity & Futures Trading Leader.

Commodity, Commodities, Commodity Broker, Futures, Futures Broker

WHY BE A SPREAD TRADER?

It seems that commodity traders are constantly in search of the magic “system” or the magic “tool”. Various trading methods have come into vogue and fallen out of fashion just as quickly as they burst on the scene. It is our belief that “Spread Trading” is a trading method that definitely should be explored, but is not often considered. We would like to challenge all of those that read this to take the time and learn a little about “spread trading”.

It is not our intention of over-selling spread trading. We do not want to give anyone the impression that there is no risk in spread trading, because there is risk. In fact there have been times when spread trades have been even more risky than regular long or short positions. It is our belief though that overall but not absolutely there is less risk involved with being a spread trader.

What is spread trading? It is trading the price difference between either the same commodity of different delivery periods, or two different but related commodities.

Examples of the first type - intra-commodity spread:
Buying July Beans and Selling November Beans

In this example the trader believes that the July price will either go up faster than the November, or that the July will go down slower than the November.

Examples of the second type – Inter-Commodity spread:
Buying the Canadian Dollar and Selling the Swiss Franc

The traders doing this believe that the Canadian Dollar will go up faster than the Swiss Franc, or the Canadian will go down slower than the Swiss Franc.

For more information click on the education selection and select from the recommended readings. You may want to start with the selections by Lee A. Gaus as they are free booklets and can provide you with a solid foundation.

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Contact IFG / 800-786-4475

There is SIGNIFICANT RISK involved in trading futures and or options on futures.

Trading futures and commodities involves significant risk and is not suitable for all investors.

Information contained herein is the opinion of the writer and is subject to change at any time