Advanced Commodity Spread Trading

Rating:
Summary: 2 dimensional Spread Trading
Review: The author presents an interesting way to view, and make decisions on market entry, reversing positions and final exit from trading commodity spreads.

You are shown how to plot the highest and lowest daily price differences between the commodities in question. You chose these two extremes from the high, low, close, spread difference each day. He calls the process the "Twin Line" approach to spread trading.

This activity gives the trader a 2 dimensional view of price differences between 2 commodities versus the customary 1 dimensional price difference of the "closing " price only.

I found the system quite helpful in making entry and exit decisions, including reversing direction.

You will find yourself staying out of non-trending markets and also doing one of the most difficult, but potentially most rewarding trading techniques, reversing positions when the "twin lines" criss-cross one another.

I am in the process of writing an indicator in TradeStation to do the plotting of the "Twin Line" method.

I recommend the book to any commodity trader trading spreads, or thinking about it.