Futures spread trading is very popular to many traders due to the smaller risk it can provide for them, among others. They pose lesser risks that straight futures trading since all spread is a hedge. When you trade in an intra-market spread the difference of two contrasts, the results will be in a much lower risk.
In futures spread trading, there is actually no “stop running”. This is because you will be short in one market and long in another. This makes you immune to and invisible from “stop fishing”.
Another attraction of spread trading is its requirement of only a low margin compared to any other financial instruments for trading. It is also lower than that of option trading. As a result, you can be assured of better efficiency with the use of your money. In fact, with this type of trading, you can trade ten spreads with the same amount of money as you will put up if you will get an outright futures position.
Another advantage in trading spreads is its volatility. It has lesser volatility than other financial tools for trading such as options, shares or straight futures. Being less volatile actually made it possible for trading futures spread to require less margin.
There are many other benefits in using this type of trading such as its ability to typically trend more times that the other forms of trading. It can be more steeply trended for longer periods. These are the reasons this style of trading is becoming quite popular to many investors today.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment