Intraday Futures Spread Trading

I've been researching futures spread trading and one of the things I'm not understanding is how you chart and apply technical analysis to spreads on an intraday basis.

In the attached image, I have the exchange traded spread (top left), the user defined spread (top right) and the components below.

The user defined spread is obviously wrong. I'm figuring as a result of no trades occurring on one of the contracts during a candle.

The exchange traded spread seems to have ok liquidity, 250 contracts on offer right now but very little volume traded, resulting in the spotty chart.

So how do you chart these spreads and apply technical analysis intraday? Also, as I mentioned, the liquidity seems ok for a small trader but are there any issues when things start moving?

 

Isn't a calendar spread on the ES just an interest rate play?

 

I'm using this as an example, I have the same issues with other spreads.

 

What other spreads? Are you watching anything in the energy complex? RB, HO, CL, and NG all have liquid spreads that are very conducive to TA.

 

there are better spreads that can be traded intraday that will trend or be mean reverting... you should look across the spectrum and not just focus on index spreads..

 

The high volume contract spreads work but isn't the benefit of spreading that you can trade the lower volume contracts? There seems to be enough liquidity but with so little volume, it's difficult to tell where the market was. I'm just wondering if there was some trick to charting these.

 

If this is the benefit you find in spreading, I think you're looking at it from the wrong angle.

 

Markets that have actual substance like grains, meats, softs, metals, and energies spread charts have much more movement and both Price action and TA works, but best to use line charts IMO. But spreads in Financials, indexes and currencies and trading one contract against same doesn't offer much movement, but it can give you a very slow profit. By doing spreads though like bonds/notes or euro/new zealand move very good. I been trading them since January using mainly daily and weekly charts and only last 6 weeks day trading.

Sugar been very good too, just a slow way of making money. But day trading can be good as well, my favorites are like Sept/Dec crude oil and euro/brit pd, but I have to use like 15/30 minute timeframes.

 

as a trick you could try to chart the bid and ask instead of last transaction.

 

Agreed.

One other point to futures spreads: the ridiculously low overnight initial margin requirements provided by the exchange SPAN credits. You can carry spreads for cheap overnight - it's the cheapest futures leverage out there by far It might be a mistake to trade them intraday for you personally depending upon your cost structure and execution capabilities. Something to think about.