How do you approach trading spreads like this?

Discussion in 'Commodity Futures' started by Adam777, Feb 9, 2017.

  1. bone

    bone

    Right. And this is precisely why I don't have a satisfactory level of confidence in execution platform long term data with the exception of CQG Integrated Client. When you are trading intramarket spreads, and you are modeling and take interest in specific product expiries.

    Generally speaking - from my experience, quality long term data for midterm and longer term futures expiries varies widely. This is not a domain of particular interest to most retail and spec traders. (Which is a shame because there is SO much opportunity there for those with the appropriate knowledge set)

    https://www.cmegroup.com/trading/interest-rates/stir/eurodollar_quotes_settlements_futures.html
     
    Last edited: Mar 20, 2017
    #61     Mar 20, 2017
  2. bone

    bone

    Again, intramarket futures spreads are so cheap to margin overnight that under most all circumstances day trading them makes very little sense. A futures Condor with an 8 tic daily range can have, for example, could most certainly have a 30-50 tic trading range (maybe more) over a period of, say, a month or two depending upon intra leg duration, volatility, and convexity shift.
     
    #62     Mar 20, 2017
  3. i960

    i960

    By far the cheapest (and IMO one of the best besides CQG) for charting is this:

    1. eSignal Classic (aka on demand [one caveat: does not support custom EFS studies])
    2. eSignal delayed service bundle for all North American, European, and Asian futures, stock exchanges, and FX. Just get all of it.

    esignal_delayed_costs.png

    Your cost is around 40$/month if you pay it annually which is like 40% less so you'd be an idiot not to. If you want you can also spring for extended intraday data for an additional 14$/month (which *can* be useful if you want to view a spread on a 1440 minute timescale which will effectively use intraday data to represent a day interval). You do not need live data for charting. Repeat: you do not need live data for charting.

    When it comes to execution you have mainly 4 "cheap" options:

    1. CTS w/ trade sniper (you'll have a spreader and access to ghetto risk management as long as you keep the client connected).
    2. TT transactionally charged (you'll need a decent broker who can provide access and margining to all the spreads - which many of the transactionally charged shops do not).
    3. IB (cheap but margining rules for energy contracts completely suck once you go 2 years out, avoid).
    4. CQG QTrader (you won't have access to any kind of synthetic spreader so risk and position management of anything beyond a cal is your own problem - also CQG requires a bunch of administrative overhead just to allow access to instruments).

    Remember that in all of the above you have to pay for data. IB is probably one of the only options where you could somehow execute without paying for data (meaning the only thing you'll see is if the exchange filled your order), but it's a complete hairshirt option and not really gonna work trading synthetic flies.

    IMO CQG IC w/ spreader is probably the best overall from a sheer power / reliability perspective but it is very expensive and as such not a real option unless you're profitable trading 20+ lots on a consistent basis. Start with CTS and use eSignal for charting.

    eSignal data is completely fine and you're getting a great fucking deal for the amount of data you actually get vs $/cost, so I definitely recommend them. Aside from a few blips in charts in older or less liquid contracts, the data is mostly clean. Additionally the charting interface allows you to chart whatever you want fairly easily. It's not just limited to cals and flies either; here's a 6 month double fly using the 1440 interval I mentioned earlier for higher charting accuracy:

    Chart_17-03-20_11-26-24.png
     
    Last edited: Mar 20, 2017
    #63     Mar 20, 2017
  4. good points. To trade this stuff properly you really need a $100k min account ideally $250k. My preference would be to go with CQG Trader capped at $395pm and build the positions in each fly separately to make a double. Chart with esignal.

    You also need a specialist clearer as its 8 round trips to get the spread on. Retail $4 round trips would cost you $32 (3.2 ticks) to get in and out. A prop firm would get you down to $16 (1.6 ticks) which allows much more room to maneuver.
     
    #64     Mar 20, 2017
    Adam777 likes this.
  5. bone

    bone

    In terms of swing trading, this is absolutely NOT the case. I have had probably 75 clients who have started trading live with $20K accounts.
     
    #65     Mar 20, 2017
  6. bone

    bone

    Having been a big Chicago prop futures spread trader in the past, from my experience the firm is going to insist that you're flat at the end of each day - and that IMO kills the trade you're speaking of here on this thread (and similar ones). There are some very experienced prop traders that carry substantial positions (in Chicago mostly yield curve and STIRS) but they've earned their chops at the firm and are way up there in terms of positive equity with the firm.

    For day trading, if you are tight with your legs there's no way you're going to come even fractionally close to the $100K you suggest with the liquidity that's being discussed for these particular trades in this thread.
     
    #66     Mar 20, 2017
  7. bone

    bone

    So, for a Crude Oil Condor May-Jun-Jul-Aug in one lots look at the margin rate:

    NYM
    CRUDE OIL LIGHT SWEET CRUDE OIL FUTURES CL
    INTRA

    1 A 05/2017

    1 B 06/2017

    1 A 07/2017

    1 B 08/2017

    $170 USD

    And you don't need to pay for automation - it will hurt you in the order queue !!!!

    Simply leg the May-Jun Cal against the Jul-Aug Cal. Two order books side-by-side with your mouse. Simple.
     
    #67     Mar 20, 2017
  8. bone

    bone

    Inexpensive, Beautiful SWING TRADE:

    [​IMG]

    Shitty Day Trade:

    [​IMG]
     
    #68     Mar 20, 2017
  9. bone

    bone

    You could add both duration and convexity to make it a bit more appealing of a day trade:

    [​IMG]

    But I would STILL argue that it's a better looking SWING TRADE.
     
    #69     Mar 20, 2017
    Adam777 likes this.
  10. Adam777

    Adam777

    Thanks for everyone's replies! I've been stuck (appropriate word) reading "the eurodollar futures and options handbook", and working through my broker and charting options.

    Definitely getting esignal classic delayed data.

    Regards finding a front end I'll probably go with CTS, but I'm also waiting to try out CME Direct which looks like it has some interesting features.

    Thanks Bone. I didn't realise this ... I will have to ask ...
     
    #70     Mar 20, 2017