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TOPIC: Open vs. Closing Prices for Spread Line Charts

Open vs. Closing Prices for Spread Line Charts 2 years 1 month ago #7

  • andy
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In his book "Trading Spreads and Seasonals," Joe Ross suggests using opening prices rather than closing prices for graphing spread line charts, indicating that opening prices are far more important than closing prices in worldwide price discovery. Does anyone else have any experience or thoughts on using opening vs. closing prices for graphing spread charts?

Answer


Hi Richard,

the time Joe wrote the book it was not possible to receive spread data from the exchange, only for both legs of the spread. Today, it is possible to receive spread data from the exchange and therefore it is not necessary to use the synthetic spread calculation A - B anymore. Spread data allows you to chart the spread using your preferred charts (bar, candle,...) and not only the line charts.

This is true for all calendar spreads and many exchange traded inter-market spreads as well.

Some good charting software can even chart "synthetic generated spreads" using bar or candle charts (they calculate the bars or candles by the tick data).

I am using both, to be honest. I am looking at line charts (because I am used to use line charts for spread) but I have started to look at bar charts a few years ago.

Also, Open VS. Close is difficult these days for the line chart because there is no open or close anymore in many markets. You will probably do better with line charts using the close and/or settlement, especially in markets with little volume.

Best,
Andy
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