Futures Spread Trading 101 – Everything You Need to Know

Futures spreads are one of the least-known and most misunderstood markets among retail Futures traders. Futures spreads, in their simplest form, occur when a trader simultaneously buys a futures contract (long) and sells another futures contract (short) to profit from a change in the differential between the prices of the two futures contracts.

Futures spread trading is as old as futures trading itself and provide an efficient way to maintain and manipulate positions within the futures market, often with the benefit of lower margin and less risk. Intra-commodity Spreads, which are different legs of the same underlying market, allow traders to roll positions from one contract month to another, or to take advantage of discrepancies between different months and profit from the price difference between the nearby and farther out market. Inter-commodity Spreads are between futures contracts of closely related markets, and often used by hedgers and speculators, the most common of which is the Soybean Crush and the Crude Oil Crack Spread. No matter which type of spread is used, when properly understood, futures spread trading can offer significant advantages over trading individual futures contracts.

Join John Rowland, Barchart’s Head of Trading Education, as he provides you with a basic overview of the different types of futures spreads as well as an explanation of the many benefits that spread trading can offer traders. John will also show you how to use Barchart.com to access the Futures Spread page, create specific spreads, and employ technical analysis.

In this webinar, you will learn about:

The benefits of spread trading; including margin, leverage, and risk management
The differences between Intra-Market and Inter-Market spreads
Contango and Backwardation
Using Barchart.com to find futures spreads, create unique spreads, and employ technical analysis

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