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Lesson 9: Statistical databases

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

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

After we have seen the most exciting aspect of commodities, the seasonality, let's see now the Statistical databases. Statistical database are, for who makes spread trading, fundamental because they provide the seasonal windows within which a spread, usually, tends to move, under certain conditions, always at the same way. But not only. In fact, there is any further information that we can get from them.

The two most known and used statistical database are SeasonAlgo and Moore Research. They 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 useful and interesting information to understand how to get the best trading opportunities for commodities.

Unfortunately, they are not free; it needs to pay a subscription for using them. However, they are so useful and important that, at least I gladly pay the subscriptions.

SeasonAlgo Statistical Database

 

As mentioned, the statistical databases give us various useful information, the first, the most important one, for each month they provide us what the most important seasonal windows are. Above you can see an example with SeasonAlgo, below with Moore Research.

Moore Research Statistical Database

 

For example, as reported by SeasonAlgo, selling the spread ZLQ17-ZLV17 on 19 February and repurchasing it on 29 July, this would have always led us to earn in the previous 30 years. Statistical databases are not just for spread traders, even those who work with futures can take advantage of seasonality.

As reported by Moore Research, by buying on February 11th CLM7 (the future of Crude Oil with delivery June) and selling it on March 7th, we would have obtained a profit in 14 years out of 15, with an average annual profit (including the losing one) of $ 3,994.

The services offered by the two websites are not limited to providing the best opportunities to trade based on seasonal windows, but they give us the possibility to do various analyses. For example, we can see if in the past there have been years that have a strong correlation with the current one as shown in the example below from SeasonAlgo. In this case, we have two years, 2006 and 2009, which have a correlation of over 80% with the current year.

SeasonAlgo Statistical Database

 

Or we can see the chart of a spread or future over time to evaluate, for example, the current price level. An example with the chart below by Moore Research.

Moore Research Statistical Database

 

So, there are many news and data we get from these two statistical databases. However, this has not to deceive us. If we could just to subscribe to these sites for easy earnings, do not you think that everybody would do it?

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 optimising not only our entry points but also the entire analysis.

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

Seasonalgo, seasonal trading, spread trading, commodity market

 

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