Seasonal spread traders are spread traders that take advantage of seasonal patterns by holding long and short positions in futures contracts simultaneously in the same or a related commodity markets, such as the Chicago Mercantile Exchange, the New York Mercantile Exchange and the London Metal Exchange among others.
What is seasonality in the stock market?
Seasonality refers to the tendency of markets to perform better or worse during certain periods of the year.
How do you explain seasonality?
Seasonality is a characteristic of a time series in which the data experiences regular and predictable changes that recur every calendar year. Any predictable fluctuation or pattern that recurs or repeats over a one-year period is said to be seasonal.
What is seasonality in forex?
Exchange rate seasonality is a currency valuation change that happens at the same time every year or in most years. It may be incorporated into technical analysis in an attempt to create more precise currency forecasts.
Are commodities seasonal?
Commodity markets are range-bound markets. Over a long period of time, the prices fluctuate between upper and lower limit. This results in seasonal patterns that represent a predictable price change. They are repeated every day, every week, every month or even every year in comparable, equal periods.
Are commodity prices seasonal?
Seasonality in commodity prices refers to periodical fluctuations in the distribution of spot or futures prices. This most commonly results from seasonal shifts in demand and supply but can also be the result of seasonal shifts in preferences, as discussed below.
What is an example of a commodities?
A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Traditional examples of commodities include grains, gold, beef, oil, and natural gas.
What are different types of commodities?
There are several commodities available. Energy products include crude oil, natural gas, and gasoline. Precious metals include gold, silver, and platinum. Agricultural products include wheat, corn, soybeans, and livestock.
What are the three 3 group of spreads in futures market?
Spreads can be categorized in three ways: intramarket spreads, intermarket spreads, and Commodity Product spreads. Participants who use these strategies are more concerned with the relationship between the legs of the spread than the actual prices or direction of the market.
How do you trade commodity spreads?
Typically, traders will create the spread by selling futures in the raw commodity while simultaneously buying futures in the finished product made from the commodity. Alternatively, traders can take the opposite side and purchase raw commodity futures while selling finished futures.