Spread Trading - Strategy & Calculation

[shekharinvest]

Nice explanation.....However, I dont understand one thing in your profit calculation - Why did you use 5000 to calculate the M2M (in column AA)? Also, where you have mentioned price under Buy/Sell, does that mean yo bought or sold the contract at that price?

ppandya,

Although, I have never traded commodities (spread lead & Zinc). What I understand is with every Rs. 1.00 move in your favour you gain Rs. 5000/- and so is the loss if it moves against you by Re. 1.00 hence he has taken it as 5000, for other pairs it would be different.

SHEKHAR

 

[shekharinvest]

Iguru,

Very nice thread indeed and very well explained spread strategy.

Not much activity is seen now a days in this thread. If some is following may kindly post some trades and help newcomers gain some confidence.

SHEKHAR

 

[sumeetsj]

Nice explanation.....However, I dont understand one thing in your profit calculation - Why did you use 5000 to calculate the M2M (in column AA)? Also, where you have mentioned price under Buy/Sell, does that mean yo bought or sold the contract at that price?

the lot size of Zinc and Lead both is 5000

 

[ppandya]

Thanks shekharinvest and sumeetsj for the explanation.....

Does any one have any idea on the software which can provide you the real time SPREAD between any two commodities?

 

[guptamani3105]

Is Somebody going for Spread between Zinc & Lead in Dec. Contract?? 3.65 diff. rt now..

 

[Bombay_Trader]

Thanks shekharinvest and sumeetsj for the explanation.....

Does any one have any idea on the software which can provide you the real time SPREAD between any two commodities?

TickerPlant by Financial technologies

 

[shekharinvest]

TickerPlant by Financial technologies

Bombay_Trader

I have tried to explore the Ticker plant but could not get the quotes. Could you please forward the link.

Thanks,

SHEKHAR

 

[shekharinvest]

A modified Spread sheet is being uploaded. Quotes are from Oct. 26, 2011 onwards.

Charts have been added below for better visualization.

Prices of Lead & Zinc are tentative for today at the time of writing this document.

SHEKHAR

 

[PitBull]

Good to see some interest in spreads starting up again.
I used to post quite a bit in this thread but it slowly died off.

I trade the Lead Zinc spread regularly and I am also looking into finding other spreads in commodities, stocks, etc.
IMHO, if you are trading the lead zinc spread, you should be looking only at EOD prices.
You can see my method on the last page of the other thread.

 

[Bombay_Trader]

Bombay_Trader

I have tried to explore the Ticker plant but could not get the quotes. Could you please forward the link.

Thanks,

SHEKHAR

I heard they are closing down their operations !!
will have to check out for new ones,

u can also try using the same by comparing the charts of Lead and Zinc,
with Bollinger Bands indicator, which is nothing but the standard deviation across a mean