Spread Trading
Spread trading involves simultaneously buying and selling related assets to profit from the price difference between them rather than absolute price direction. It reduces directional risk and focuses on relative value or convergence/divergence of prices.
Understanding the Concept
• Calendar spreads: same asset, different expiration dates • Inter-market spreads: related assets (gold vs silver, BTC vs ETH) • Pairs trading: long one stock, short a correlated stock • Lower risk than directional trading but also lower potential reward
Real-World Example
You notice BTC and ETH historically move together, but ETH has lagged recently. You go long ETH and short BTC in equal dollar amounts. If the ratio converges, you profit regardless of whether crypto overall goes up or down. You're betting on relative value, not market direction.
How Strykr Helps
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