Many of the substantive trades that might be invoked or suggested through MMA involve trading one or more contracts against another, or one or more commodities against one or more others. Since MMA explores differences in price behavior on a statistical basis using statistical standard deviations from a norm, the user should attempt to normalize such risk by maintaining an equivalent dollar risk between products. This will lessen the chance that a very high priced product will overwhelm the spread trade and it will reduce the risk of over-exposing one leg of the spread compared to the other.
You will not want to find yourself in an unbalanced spread. To avoid such a situation, compute the dollar value of the members of the spread, taking into account the hoped-for possible market movement and the reported directional correlated experience of the markets, and attempt to match up the dollar value of opposing positions. In a large trading exercise involving more than one pair of markets, regular adjustments may be necessary over a prolonged trading experience as the markets evolve over time.
There is a very high risk in trading, and all users of CSI products should obtain competent advice before entering trading situations. Please read over all of the material presented in this manual and attempt to paper trade various scenarios before assuming any real at-risk market involvement.
We at CSI wish you the best in your trading activities. We have worked very diligently to provide you with the best possible chance to explore market opportunities both through MMA and through our Trading System Performance Evaluation software. We welcome your comments and questions.