I dont understand your question... If you want to trade bund bobl schatz fly, i think the ratio is 1-4-3...but then you also have to put in the pricing ratio....another example If you put in a heat vs wti crack spread 1 for 1, the price ratio is * 42 on the ho leg to turn from gallons to barrels Lets say hypothetically, one leg on an rv pair has has a much higher vol...instead of doing it by price to create a usd neutral pair, you can do 2 by 3 with the hopes of smoothing out the vol.....this tends not to work most of the time but it clearly illustrates how you can create a new times series. This is pretty much what box spreads and flies are all about...alot of interest rate traders do this.. In terms of randomness, feel free to read above comments where i have mentioned...you need to have an idea of why a relationship exists, dont just chart a fly for the sake of it....understand the price drivers..also the idea that spread trading is less risky than flat price is a fallacy.
Thanks for your answer. Your examples make sense. I was referring to a program of mine that will neutralize volatility in spreads. An extreme example would be a two year treasury over crude oil using an 11:1 ratio. The spread is not industry standard, no one else is trading it, commissioms are large, levels and TA would be random, the drivers are probably obscure or non existent.
I'm not sure you have a proper spread. Sounds more like a couple positions one might see in a long/short portfolio of diversified markets.
During last night's Group Webinar, we talked about more intermarket spread construction. In particular, I reviewed how a 'dirty' TED spread introduces a level of basis risk into the trade, different ways to use a strip of Eurodollars against the Treasury contract leg to help mitigate basis risk to the extent practical, and how watching the corresponding Swap product might give you a premature hint of basis volatility. Some clients also had a few nice Eurodollar and Euribor spread trade set-ups to jointly review and discuss. The webinars are recorded and distributed to clients, and new clients have a few years of recordings sent to them when they start with me. Many of the webinars are topics on specific subject matters that I want to discuss. We have three technically-oriented criteria to satisfy for entering a trade, and we set our stop loss level and profit target based upon a trading range rule at the time of trade entry. Over the years I have tried to engineer as much discretion as I felt I reasonably could out of the system.
All these cheap shot comments....please. If you're looking to attack an online sham artist.... LEMME CLEAR THIS UP FOR YOU......YOU HAVE THE WRONG GUY. There are plenty of guys out there promising to make you all sorts of $$$ trading their S&P Systems in the back of Futures mag or S&C. Bone's NOT one of those guys....not by a stretch. The MAN...yes, he's an adult & not some kid, has years of experience trading products both on the floor & upstairs on institutional desks. If you don't want to pay up to work with him......THEN DON'T. But, he's not here to rip anyone off. If his fee is an obstacle for you, you have my empathy & anyone would understand that, but it's also not his fault. Enough with the cheap shot comments. You're not bringing anything constructive to this thread, forum or site.
i agree with you 100%, I think his course maybe worth it for some who can afford it, but what J-law fails to see is that Bone has been caught lying as a marketing ploy to attract c lients.. as long as he does not lie and oversell, his course may be fine.....
I think his comment above about last nights webinar on how to bootstrap FI futures was not only professional but, if actually true, then very interesting as alot of guys cant hedge using Dvo1 calculations, including myself. If he just sticks to clean marketing that his course enhances product knowledge but also how he tries to enter and exit without promising results or using false results....then that is not only fine but is up to the student. If you followed the saga from start, he lied about trading spark spreads on tt, he claimed he made 500k trading gas oil crack to entice people on his methods without being able to prove with GAAP standards when asked, he lied about references I think his marketing approach now is better but it will take time for the fire to settle
He also lied about client TH. He claimed a client of his worked at Goldman after graduating form the course. Client TH stated on ET that it was a patently false claim.
In terms of trading heat rate spreads using the TT platform and the veracity of the Advantage Futures proprietary trading statement or the legitimacy and authenticity of the client references I provide to prospective clients undergoing due diligence, I would be happy to provide sufficient evidence to any regulator or legal authority. The only point I have been mistaken about was which one of my client references took a job at GS. I also have a client who from time-to-time I use as a reference who took a job at the UBS London desk. Did I have anything to do with them getting those jobs ? Nope. Am I proud of them ? Naturally. Both are very talented individuals. I have well over a dozen former clients who have acted as references to prospective clients in the past. For example, if I have a prospect in Singapore, I might want to refer him to an experienced client in Singapore. If I have a client who trades Power, I might want to refer him to an experienced client who also trades Power.