Considerations on Statistical Databases

Statistical databases, Moore Reserach, SeasonAlgo, commodity, commodity ebook, spread trading ebook

Statistical databases, Moore Reserach, SeasonAlgo, commodity, commodity ebook, spread trading ebookWhoever works on Spread Trading in Commodities will definitely have at least heard of them: Moore Research and SeasonAlgo are analysis and strategy software (statistical databases) that provide charts to support our trading.

These statistical databases are used to know the recurring pattern of seasonality on single commodities or spread strategies.

This is definitely useful and interesting information to understand how to get the best opportunities on commodities. The problem may arise when we are relying only on this type of software and information from these sites, without adequate experience and/or preparation.

You well understand that it is ridiculous to think that with the only possession of statistical information you can get easy gains. As you well know, nobody gives us money. And if we could just to subscribe to these sites for easy earnings, do not you think they would do it everybody?

Here are some examples of analysis proposed by these statistical databases.

Below the built spread chart by buying Soybean and selling Wheat. Both futures with delivery May 2017 and proposed by Moore Research.

Moore Research statistical database


The yellow vertical band indicates the favourable seasonal window they have proposed. But as you can see, the spread in question (black line) instead of having a bullish trend, as suggested, has even had a negative move.

Below you can see the chart of spread built buying Live Cattle future delivery June 2017 and selling Lean Hogs future delivery August 2017. Spread proposed this time by SeasonAlgo.

SeasonAlgo statistical database


In this case, the vertical red line indicates the beginning of the favourable season (bearish), and the green line is its end.

But even on this occasion, the spread (black line) instead of having a bearish trend has moved violently to the upward.

In conclusion, statistical databases can and should be considered as good suggestions and as a good starting point to know the seasonality, to keep an eye out at a certain time of the year.

The climate and other demand and supply factors can be slightly shifted year by year, if not changed compared to previous years. So it is important to apply fundamental and technical analysis on individual legs/commodities for optimizing not only our entry points but also the entire analysis.

So, you do not think these sites have the magic formula. Let's treat them for what they are, a simple statistical support, remembering that we are always the bosses of our trading!

Seasonalgo, seasonal trading, spread trading, commodity market 


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