Tuesday, November 23, 2021

Outright Futures or Calendar Spread trades ? or Inter Commodity Spread trades ?

One of the things I learned over the years is about using different tools for different market conditions as potential opportunities come knocking.

The dynamic nature of the market trend DOES NOT warrant one template or one formula fits all.

We can build the anchor template on the premise that can be used to derived other templates.


The trend can only exist in what I will classify as UP - SIDE WAY - DOWN trend.

In the UP and DOWN trend. Both this phase are opposite with different magnitude or intensity. 

Like the weather we will experience light rain, pouring heavy rain and "normal" rain. We will prepare and equip differently depending on the condition.

Similarly, we will need different templates for different trend intensity.

Yes, occasionally we do observe the near vertical trend moves and  at time the gradual moves. Obviously, the question is do we use ONE standard template or RULE for an UPTREND or do we have 2 different templates? 

Many things we can learn by seeing the obvious if we take notice.

All we need is to take notice and come up with a simple small strategy

There are time, taking the FUTURES outright is the preferred choice. There are situations CALENDAR spread is the better option. Sometime Inter Commodity spread is the alternative to all.

How we decide to use will depend on the trend and the position of the current versus the expected overall trend. Only from such assessment we will be able to determine our Risk Rewards Ratio and implement an appropriate strategy   

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