Seasonal Commodity Spread Trade for July/August 2015
2.08.2015Company: Amcham
In June 2015 we introduced a futures spread trading strategy by a sample analysis of the wheat spread. In today article we shall start our regular monthly analysis. In each monthly article we shall analyse a spread with a high winning potential. In the following month we shall analyse the spread development and will select a new monthly spread.
Seasonality is a typical characteristic of most commodities. Thanks to seasonality it is possible to identify annual commodity trades with repetitive seasonal trends. This increases predictability of price movements in a particular period of the year which also increases the level of probability that the commodity trade will result in profit.
Commodity spread trading is more advanced and less risky way of seasonal commodity trading. It is based on a principle of hedged positions, also called covered positions. Commodity spread trading involves buying one commodity with expected seasonal price growth, and selling another commodity with expected seasonal price decline. Such covered positions are less exposed to fundamentals (climate, economic or geo-political influenced) and thus the risk of trading commodity spreads is lower than in case of standard trading.
Commodity spread trading implies minimal time requirements, about 2 hours a week. It is an easy to learn method suitable both for beginner and experienced traders which generates 20-80% profit p.a.
Learn more on seasonal commodity spread trading with minimised risk in a short video at
www.tradeandfinance.eu/en/videos/?catid=komoditni-spready&slg=how-to-profit-from-seasonality
www.tradeandfinance.eu/videa/?catid=komoditni-spready&slg=jak-vydelavat-na-sezonnosti
Analysis of Seasonal Commodity Spread Trade for July/August 2015
Recommended by SeasonAlgo.com, analysed by Romana Křížová, TradeandFinance.eu
Buy Heating Oil with delivery in December 2015 – Sell Heating Oil with delivery in February 2016
Trade analysis
- Trade window: trade entry on 24th July, trade exit on 1st September
- Only 1 losing trade in last 15 years (in 2004)
- 100% Win in last 10 years
- Spread is traded on low prices in current year – good potential for annual seasonal price increase in the trading window
- Strong seasonal historical patterns correlation in seasonal window
- High Reward-to-Risk-Ratio (RRR) – 6.41 on 15 years data history
- $447.16 average profit/year/contract
TradeandFinance.eu Trading Strategy:
- The spread currently test historical support level and is forming a Double Bottom pattern.
- Entry in the trading position can be foreseen in case the spread closed above -0.0275.
- Risk only $80 per contract with the Stop Loss at -0.0296.
- Three Profit Targets can be used aiming for profit of $155, $268 and $386 per contract.
- Spread trading position can be open with 6 contracts and minimal trading capital $10 000
Learn successful commodity trading in courses and webinars by TradeandFinance.eu:
Free webinars
Courses and webinars
Biweekly commodity spread markets analysis
Any information provided by TradeandFinance.eu is intended solely for educational purposes related to exchange trading and in no case serves as a particular investment or trading advice.
Investing and trading with financial instruments and commodities in particular involves a high risk. A decision to trade at exchange is a full responsibility of each individual and only he/she himself/herself is fully responsible for his/her own decisions.
Never enter any trade whose nature and rules you do not fully understand. The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. Moreover, results of historical trades are no guarantee of future trading profits.
