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Futures spread is a trading technique where you open a long and a short position simultaneously to take advantage of a price discrepancy.
The idea behind futures spread trading strategies is to reduce the risk. At the same time, it allows you to capitalize on the pricing inefficiencies for one or several instruments. You can use spreads for a variety of asset classes. In this article, we will focus on using it with futures trading and commodities, in particular.
A while ago, due to the market’s structure, spread trading strategies were available only to institutional and large-scale traders. However, today, they are gaining popularity among retail traders, as well. This is thanks to technological development and a reduction in the margin requirements. Furthermore, these futures spreads are gaining popularity among retail traders, as well.
0:00 Music Intro 0:13 Intro 1:01 Disclaimer 1:15 Futures spread trading 2:53 How it works 3:58 Types of futures spreads 6:56 Futures spreads margin 8:45 Common futures spreads 10:34 How to trade the spread 13:25 Advantages 15:00 Disadvantages 15:50 Final thoughts
