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Seasonal Patterns, how are calculated and why not use them for SL / TP

Basically, we have two ways to evaluate seasonality, numerically and visually. Both methods have their own advantages and disadvantages. In this article, I would like to explain how to correctly evaluate seasonality with the help of seasonal patterns and how to avoid common mistakes.

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Commodity Futures Spread Strategy for June, 2013 - Buy SBV13-SBK14

This spread combines several conditions to create good trading opportunity:

  • 87% Win in last 15 years, very strong seasonality in the last five years
  • Nice support level to place stop loss
  • Historical channel low - Current year is moving around historical channel low with nice space for profit
  • High long (15 years) and short (5 years) pattern correlation
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Commodity Futures Spread Strategy for May, 2013 - Buy CZ13-CU13

This spread combines several conditions to create good trading opportunity:

  • 100% Win in last 15 years (there were only 2 losses in last 30 years)
  • Nice support level to place stop loss
  • Historical lows - Current year is moving around historical lows with nice space for profit
  • Long seasonal window - A lot of time for seasonality to kick in. Possibility to take profit earlier
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Commodity Futures Spread Strategy for April, 2013 - BUY HOZ13-HOU13

This spread combines several conditions to create good trading opportunity.

  • 93% Win probability - Only one year in fifteen was looser
  • Seasonal patterns correlation - All patterns up to 20 years have similar movement and correlation, more than 90% in seasonal window
  • Double bottom formation - Support level to place stop loss
  • Historical lows - Current year is moving around historical lows with nice space for profit
  • Long seasonal window - A lot of time for seasonality to kick in. Possibility to take profit earlier
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Commodity Futures Spread Strategy for March, 2013 - BUY LCZ13-LCV13

Spread is moving for last several months in range area of 0.5 - 2. Seasonality starts in March and ends in first half of June. Aggresive traders can enter at around 1.2, more conservative traders can wait for better price at around 0.8. Spread has nice support so stop loss should be placed below it at around 0.5.
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Introduction to Futures Spread Trading

Spread trade is the simultaneous purchase of one security and sale of a related security, called legs, as one unit. Opening spread trade, we are in long and short position. Why is that useful? There are several applications depending on intentions and traded security. Let’s see some of them.

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SeasonAlgo Platform Advantages

SeasonAlgo is the first and only platform designed for seasonal spread trading. Started as personal project for spread analysis, released later publicly for fellow traders, improved with ideas from the community, SeasonAlgo became a professional service available to all spread traders. The whole platform consists of several tightly integrated modules.

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Why to Trade Seasonality?

In statistics, many time series exhibit cyclic variation known as seasonality, defined as the repetitive and predictable movement around the trend line. It is detected by measuring the quantity of interest for small time intervals, such as days, weeks, months or quarters. The best known seasonal progression is the outdoor temperature. Based on the time of the year, you probably know the range of temperatures you can expect.

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