A Guide to Spread Trading Futures by Rajen Kapadia

Author:Rajen Kapadia [Kapadia, Rajen]
Language: eng
Format: azw3
Published: 2014-10-07T04:00:00+00:00

Below are two spreads, the first chart is a soybean butterfly spread, the second is the 2s 10s Bonds spread between the Shatz and Bund.

Soybean Butterfly

As you can the soybean spread does tend to come back after every break out, now depending on our account size, to average on such a spread is much more appealing as historically price action suggests that we will get a retrace. On the other hand the Shatz Bund Spread, the price action is more directional, so in this case you would look to average less if at all, and more be looking to stop out, and look for break outs.

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