A Quick Introduction 1.
Seasonal Spreads are simply a simultaneous buy and sell in different futures contracts.
The trader is only concerned with the relationship between the prices of the different contracts involved and not with the direction each individual contract may move. If a trader thinks the difference between the contracts will increase , it would be possible to win on the trade as long as the contract he buys goes up more than the one he sold, or even if the one he sold goes down more than the one he bought. If a trader thinks the difference between the contracts will decrease , it would be possible to win on the trade as long as the contract he buys goes up less than the one he sold, or even if the one he sold goes down less than the one he bought. We look for Seasonal Spreads that have a strong historical pattern of consistency. Although past performance does not insure future results, we sure do like to have a strong historical tendency in our favor during the time of the trade.