Futures Spreads Master Class

If you ask any retail trader simple question - "What type of trading or trading strategy they use? - they would probably answer scalping, day trading, swing trading, trend following or maybe options trading.

The vast majority of traders do not even know that insiders, managers, locals, and many successful traders do not use any one of the above strategies in their trading. Despite the phenomenal development of e-commerce over the past 15 years, the strategy of professionals remains a secret for the majority of non-professional market participants. What is this strategy, you ask? The answer is very simple: seasonal trading of futures spreads!

What makes spread trading so attractive to professionals? There are many factors but I will mention only a few:

Seasonality.

Futures markets are subject to certain seasonal factors that repeat from year to year. You all know that the economy is built on a simple supply and demand rule, which in turn varies with the time of year. For crops, we have a planting and harvesting season; for energy, we have an increased demand for fuel during the holidays or during the cold season, natural gas is subject to hurricane season from June to October and the weather, orange juice, and coffee are related to the weather in Brazil and in Florida, currencies, and indices influenced by a meeting of the Federal Reserve or Central Banks, etc.

"Smart money", or big professional traders, have been trading seasonality for a very long time, and there is a good reason for it. To give you an idea, consider, for example, that the seasonal spread on Soybean between the old and the new crop has been profitable at 82% since 1970, with the highest profit of about $25,000 per contract in one year, and the seasonal spread for Soybean Oil was profitable at 90% of entrances over the past 15 years!

Margin Requirements.

Many traders can not trade positions due to the fact, that position trading require full initial market margin and day trading usually require as little as 25% of the initial margin. If we look at the Soybean Futures that mentioned above, the initial margin requirements for positional trading at the moment of this writing is $1,950.00 for one contract. Compare it to the margin requirement for the Old Crop / New Crop Futures Spread for 2020, which is $325.00 for 05/2020-11/2020 futures spread. If the futures market moves just 10 cents in your direction, you would realize about 25% return on your initial margin. If the futures spread moves 10 cents in your direction, you would realize about 150% return on your initial margin. It is easy to see why many professionals prefer to trade futures Spreads.

Trade without stops.

If you trade Futures without protective Stops, you would very quickly learn that this is very dangerous. Markets moves are unpredictable, the price of the futures contract can move to the market limits where it will be impossible to liquidate your positions. Even if you have protective STOP, it does not guarantee that you will limit your losses to the intended amount, since market conditions could make it impossible to close your position at the prices price. There are also could be circumstances, when the exchange will simply cancel your Stop order, if, for example, there is a huge gap above or below your Stop Order and the best available price to fill your order would be more than a certain allowable range. These are all extreme examples, that could happen, but the most likely scenario is that simple market nice will hit your Stop Order before continuing movement in your direction.

When you trade Calendar Futures Spreads, you can greatly minimize your risk compared to Futures simply because you will be holding two contracts in the same commodity with a different expiration date - one is Short and one is Long. Even if the market moves Limit Up or Limit Down the spread would not change that much, and quite often won't change at all since you would have an unrealized loss on one leg of the spread that will be offset by unrealized profits on the other leg.

In certain spreads and markets, when entered properly, you can limit your risk exposure to "Carrying Charge" between two contracts in your spread. Since many futures markets are built on the principle of contango, where the price of long-term contracts is higher than the spot price, the maximum risk when trading these spreads in such markets will always be equal to the full "caring charge" price, or the amount required to hold the commodity in storage until later delivery day. You can trade the following markets using "carrying charge" as your protective stop in normal market conditions: corn, wheat, soybean, soybean meal, soybean oil, sugar, cocoa, orange juice, copper, pork.

Low cost.

Trading Futures Spreads is low in cost since you don't trade often and hold your open positions for a long period of time. Less trading means fewer expenses associated with active trading.

I think that the benefits and advantages of trading Futures Spreads are very clear.

Description of the Futures Spreads Master Class

PART ONE - Introduction

In this lesson we will tell you about the main components that are included in the futures spreads trading, tell you what makes spreads attractive to traders, talk about margin requirements, consider the types of spreads. You will also learn about the basic rule that should be used when choosing a futures spread, we will talk in detail about the so-called "limited risk spreads", seasonality when trading spreads and the "two days" rule. In the second half of the lesson, we will examine in detail the settings of the QST Charts terminal and you will learn how to properly use the section "spread charts", how to enter and exit positions and how to manage risk.

PART TWO - 20 of the most popular and historically profitable strategies.

The second part of our training course will be divided into several lessons, during which we will examine in detail the following types of spreads for various commodity futures commodities:

Seasonal Grain Spreads

• Soybeans
• Soybean Meal
• Soybean Oil
• Corn
• Wheat
• Oats

Seasonal Meat Spreads

• Live Cattle
• Feeder Cattle
• Lean Hogs

Seasonal Softs Spreads

• Orange juice
• Sugar
• Cocoa
• Cotton

Seasonal Metal Spreads 

• Silver
• Gold
• Copper

TRADING TERMINAL

Any knowledge not tied to the practice will be useless, so we conduct all our training courses using one of the best professional trading terminals for trading futures, options, and spreads, an official analytical platform for CME Group - QST Charts.

You can find out more about this terminal by getting a free DEMO for 14 days before the start of training by filling out a demo request here.

All participants in the training will receive a new DEMO version for the duration of the course, even if they have already received a demo before.

For real trading, you can use any trading terminal that suits you.

TIME AND PLACE OF TRAINING

Individual courses are held at any time convenient for you immediately after payment. We will contact you within 24 hours after payment to arrange the schedule for training. We have evening and weekend times available for individual training.

The duration of the course is two weeks. We will have five sessions during this time. Each session last approximately three hours. After each session, you will have time to practice your new knowledge in a real market condition in the demo before the new lesson.

What distinguishes these training courses from all the others is the opportunity to conduct training directly on your computer and trading terminal. Through our Adobe Connect connection system, you can independently work at your terminal under the guidance of a teacher.

Each lesson is recorded and video is stored on our servers. You will have access to these video recordings for six months after completing your training.

If you want to repeat this course, you can join our group session for free. Just let us know upon completion that you want to participate in the group session and we will notify you when the next group class will take place.

You do not have to open an account with ITG Futures to take this class, but we hope that you will be satisfied with our service and will become our client.

If you have any question regarding this course, please contact us before making a purchase.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. NO GUARANTEES ARE MADE THAT ANY INDIVIDUAL WILL ACHIEVE PROFITS USING TRADING SYSTEMS AND STRATEGIES TAUGHT IN THIS TRADING COURSE. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.