The futures markets offer participants a diverse array of unique opportunities. From aggressive speculation to defensive hedging, there’s a product or strategy idea for almost any financial goal. Spread trading is one innovative way that futures can help traders protect or secure market share.
At first glance, futures spreads can appear intimidating. However, after viewing the fourth installation of the dt Pro webinar series, Futures Spread Trading, even the most cautious trader may be prepared to jump into the market with both feet.
Benefits of Spread Trading
The goal of a futures spread trade is to profit from changes in the relative value between two contracts. In order to accomplish this objective, a trader must simultaneously open both a long and short position in the same or related market. In a spread trade, gains and losses are dependent upon the price action of each contract.
Spread trading may be conducted via futures or options. It’s an especially useful discipline for capitalizing upon seasonal trends and implementing financial risk management strategies.
In the dt Pro webinar Futures Spread Trading, Daniels broker Jace Jarboe introduces you to spreads. In his presentation, he outlines a few of the key benefits of spread trading:
- Reduced systemic exposure: By opening opposing futures positions at the same time, a trader can minimize the negative impact of unexpected developments. Stock market crashes, extreme weather, and geopolitical chaos are examples of events that can increase risk suddenly. Spreads limit their negative impacts, providing protection from the unknown.
- Minimal trading margins: Due to the limited exposure of spreads, the overnight or maintenance margin requirements are vastly reduced. Holding an open futures position through the daily or weekly close can be capital intensive. Keeping a spread trade continuously active requires only a fraction of the funding.
- Uniform trade: On the dt Pro platform, spreads may be traded in the same fashion as a standard futures contract. A complete arsenal of order types is readily available through the platform’s chart trading or depth-of-market (DOM) interfaces.
At first, the concept of futures spreads may seem abstract. Regardless of your initial impression, their tradability is routine. After watching the dt Pro webinar, you’ll be up to speed on how to engage spreads on the open market.
Spread Trading Courtesy of dt Pro
If you have any experience in the futures markets, then you already have the foundation necessary to trade spreads. That’s the beauty of dt Pro ― spreads are presented in the same fashion as standard futures. Pricing data streams from the exchange to your quote board, readily accessible via chart trader or DOM.
In this dt Pro webinar entry, Jace breaks down the platform features integral to spread trading:
- Quote board setup: Locate and add any desired product, from crude oil to corn.
- Contract specs: Quickly find out the specifications of any contract listed for trade. Simply access the help dropdown menu for useful margin, tick size, or scheduling information.
- Charting: Real-time charts track spread pricing, as is typical of futures contracts.
- Trade execution: The one-click order entry offered by dt Pro is especially useful in executing a spread trade. With a single mouse click, the multiple positions of the spread are automatically opened at market. Entering a new spread trade, or closing out an existing position, could not be easier.
- Position management: As with standard futures, bracket and multi-bracket functions are available for locking in profit while limiting downside risk.
In addition to these essential facets of dt Pro, Jace illustrates how to execute calendar and inter-commodity spread trades. By the end of the presentation, you will be able to locate quotes, build relevant charts, and actively trade spreads on the dt Pro software platform.
Following up on the Futures Spread Trading dt Pro Webinar
If Futures Spread Trading piqued your interest, more information is only a phone call or email away. For access to a free, two-week dt Pro demo account, or to talk about how futures can help achieve your financial goals, contact the team at Daniels Trading today.