Spread trading is an investment strategy that studies the relationship between the forces of 2 or more financial instruments with the aim of making a profit from the net result of open positions in the portfolio. A spread trading does not take care of the performance of 1 underlying but of the performance of all underlying assemblies combined in buy and sell.
We-Spread SP500 vs DAX
Trading Plan forecast for the week 11-15 Jan 2021
After a few weeks of pause due to the Christmas period, we resume the analysis of the spread trading forecast curves with the We-Spread indicator. The first trading spread we will look at is between the SP500 and DAX pair.
The two stock indices were subject to purchases and a strong and decisive upward trend from the beginning of 2021. Yesterday the SP500 closed above 3830, creating a record high and + 2% from the beginning of the month. The DAX did even better, because in addition to recording an all-time high it also outperformed the Americans with + 2.92% from the beginning of the month.
For the umpteenth time, the possibility of seeing the spread curve in favor of the US is moving away.
We believe that following the bullish trend of the spread can still be a profitable choice but not immediately. The most favorable scenario could be a double bearish touch of the curve which could finally be followed by a more decisive bullish phase.
In essence, European equities (headed by dax) are performing better than the US stocks market.
Trading Room for spread trading
There are 2 dedicated telegram channels for spread trading updates:
We-Spread GOLD vs SILVER
Trading Plan Forecast for the week 11-15 January 2021
The Spread curve between GOLD and SILVER continues a sideways phase but we notice a bearish hint in mid-December. We could define this point as an important minimum from which to continue with bullish trades on this spread.
This week we closed a sell of GOLD against a BUY of Silver with profit but I must say that it was a difficult trade because it went against the analysis of the trend. The trade was opened on December 29th and only yesterday, January 8th, did it go into profit. In fact, looking at the gold-silver daily spread below, you will notice a downward return of the curve that helped us.
Now it will be important to understand which direction to follow.
We believe that following the bullish trend of the gold-silver spread can be a profitable choice given that the yield from the beginning of the month of gold is -2.57% against a -3.63 of Silver.
We-Spread intraday forex
We are pleased to anticipate important news regarding spread trading with an intraday perspective on forex. After months of development, testing and corrections we are almost at the final stage of the release of a new intraday trading system. The goal of the new intraday trading system is to maintain a spread trading setting but at the same time be able to make profits in the shortest possible time.
Here an example about 5 forex pairs using CME e-micro futures. But the system work also with CFDs.