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ES Futures Spread Trading Advantages & Disadvantages
I currently have the following eMini Futures spread: Long ESH9 2450 & Short ESM9 2424. I plan to close the ESM9 if the market starts to go up. What are the disadvantages of holding the ES spreads overnight or for a few days?
Can you help answer these questions from other members on NexusFi?
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
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In commodity trading intra-month spreads can and do move a lot. In theory they are bounded by things like storage costs, cost of money etc, but in reality when storage is full anything can happen.
Not so with most financial futures like equities, and currencies. For these contacts the spreads are subject to arbitrage, and hence stay in very tight ranges. For equities this is dividends received minus cost of carry, for currencies it's the different in the interest rates of the two currencies. So Long ESH9 Short ESM9 has a greater exposure to interest rates than it does to the absolute level of the stock market.
I would like to learn more about the types of futures spreads you put on in energy & other commodities. I am mostly interested in the shorter term (less than 2 weeks) vs the medium (more than 2 weeks) & the longer (more than a month or a quarter).
From a far away perspective (in Austria) it looks like the cold blast in the US is coming to an end. I am surprized that the NGH futures did not move further and are far away from taking out the highs of Q4 2017.
Today, Thursday, the quarterly Pigs and Hogs report will be released.
For many years, this report was known for causing large moves of the hog prices. Recently these reports conformed well with the estimates of the traders, and, thus, price moves were …
It is interesting to note that the price for Palladium almost reached the price for Platinum. At some point it might be interesting to buy the 2*PL-PA spread.
The reason for the relative strength of Palladium is not clear to me.
but there's more of a focus on outrights than spreads, at least in the latter 5.
I'm a CL & NG trade and post a lot in that CL analysis thread. I'm also a spread trader but probably not in the way most people are.
@myrrdin is very knowledgeable on commodities and very active in most of those threads.
Sorry - usually my time horizon is several months. It is my experience that for a small fundamental trader it is easier to make money with these trades, as we do not have all information that the big guys do have.
Spreads I trade are usually inter-commoditiy spreads, currenly RB-HO and RB-CL in the energies and KW-W in the grains.
Please feel free to ask your questions in the threads mentioned by SMCJB.
