CHARTING

Just like with any commodity a spread can be bought and sold at “x” price, and it can be charted just like any other market.

So how do we plot it? Simple! It is the difference between two contracts.

You must be asking “How do I make money if I am long and short the same commodity?”

The answer is you are hoping to profit from the difference in the two contract months, not from a trend higher or lower in any particular market.

With a spread, you follow the relationship, or difference between the contracts, without having to pick a market direction.