Newbie Question - Create Index Spread

NexusFi · 2020-03-22T23:32:31-04:00

I have obviously never traded futures before, and I am a long ways from ever doing it. Just learning at this point. Say I wanted to create a custom spread to mimic the daily percentage moves between the NASDAQ and the DOW indices. This way when the DOW moves 3%, my YM position moves 3%, and when the NASDAQ moves 3%, my NQ position moves 3%. Given that I want the spread between these two indices, I will obviously have to buy/sell a few more of one or the other to make a near balance... and the spread would …

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Updated March 23, 2020

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Newbie Question - Create Index Spread

March 22nd, 2020, 11:32 PM	#1 (permalink)
CanadianGod Regina, Saskatchewan Posts: 4 since Mar 2020 Thanks Given: 2 Thanks Received: 1	I have obviously never traded futures before, and I am a long ways from ever doing it. Just learning at this point. Say I wanted to create a custom spread to mimic the daily percentage moves between the NASDAQ and the DOW indices. This way when the DOW moves 3%, my YM position moves 3%, and when the NASDAQ moves 3%, my NQ position moves 3%. Given that I want the spread between these two indices, I will obviously have to buy/sell a few more of one or the other to make a near balance... and the spread would never be perfect. Can any one tell me how to calculate the minimum # contracts on each leg to create the minimum sized spread to make this work? I am new with tick size, tick value, contract size, etc. I tried it with simulated CFDs and it was 3 NASDAQ to one DOW, but futures are a totally different game. Thank you to those who donate their time. I hope to pay it forward one day.