Index Spread Traders

im just tired of hearing people say spread trading has no risk and has lower margins. its a recipe for disaster especially if u have computer errors or internet down. u gotta be perfect. even then profits arent huge. best trade this year. buy 1 es and hold it until now. this 1 contract made u more than u did in all this time.
its cool ur looking at it but to get so pumped thinking u found some secret or missing link to trading is not a good idea. a couple bad plays compounded in spreading and ur toast.

 

spread away because as i see u selling in say the es it will reduce my cost to buy so feel free to throw up lots of contracts

 

I'm not really pumped on it. I'm pumped on the algos and scripts i wrote to get an edge on actual HFT stuff. This is just a chart on one of my screens. Charting a spread or even trading a spread is not an edge.

 

You don't think its useful to look at a spread like NQ/YM?

 

u put this trade on and u have slippage n fees..but ur perfectly hedged. u can sitback and wait for direction to show itself then just offset the other side n let it rip..wish even this strat was that easy...

 

im saying all of this is only useful if it gets us what we are after which is someone elses money. wether im a trader a broker a trading blog or twitter all we are all after is other peoples money becoming our own. if its working for you great. thats all that matters. thousands of different ways to trade. i prefer spreads in options due to limited risk and most option trades arent day trades. imho

 

I prefer ES outright, but those index spreads are useful for some types of price action, that's all I'm saying.

 

Can get small, swing them, whatever....similar to the new micros in some ways.

 

I believe trading the outright is about random walk while trading the relative value is about mean-reverting property.

Being well capitalized in order to meet margin calls is crucial and that's what affected big funds as LTCM (ultimately they were right on every single trade)

Relative value is unknown territory where golden fruits might be growing..

 

I still remember I once tried to trade fas
Faz pairs. In backtest it looked very nice but when putting my code to real trading, it did not make money due to slippage