Intermarket Spreads

Crack, crush, and relative value without a slogan.

Intermediate 5 min read Course 17 of 60

Course 17 of 60 in the futures hub. The object is crack, crush, and other intermarket spreads as two products, two ticks.

Relative Value Has a Spec Too

Relative Value Has a Spec Too. The honest one-sentence object of this lesson is crack, crush, and other intermarket spreads as two products, two ticks. If you cannot say that without opening a platform, you will size the wrong clock. The failure mode that actually hurts accounts is one-click spread tickets without knowing each leg's tick. Write the object, then size. Educational only.

Analog, not identity: relative value is still two notional piles. Crypto perpetuals and cash equities are a different lesson. Different machine, different hours, different ruin path. Contrast the object with forex hub rather than treating every product as the same machine.

1. What intermarket means

What intermarket means is the first working definition. Crack, crush, and other intermarket spreads as two products, two ticks. People skip this because a chart is easier than a specification. A chart is not a spec. If you cannot explain Intermarket Spreads to a skeptical friend without a screenshot, you do not understand it yet.

Keep a crib note: object, invalidation, dollar cap. One-click spread tickets without knowing each leg's tick is how cribs get skipped. Do not skip. For the arithmetic habit, use P&L calculator until dollars are boring.

Two products, one relative-value object Crack-style Product vs inputEnergy example classSpecs rarely match 1:1 Crush-style Bean vs meal/oilAg example classRatio is a spec, not a vibe

2. Ratio and tick mismatch

Ratio and tick mismatch. Convert every pretty statement into dollars. The arithmetic below is illustration — live ticks, pips, and margins change. Re-read the live schedule.

Leg A $10/tick + leg B $12.50/tick is not 'one spread tick.' Size each leg's dollar stop, then the residual. $159 is the residual cap.

If that arithmetic already exceeds your cap, the lesson is over: pass or step down in size. Passing is a position. Confirm the dollar translation with stop calculator so the notebook and the statement agree.

You must convert both legs into the same dollar unit spread $ = (n1 × tick$1 × Δ1) − (n2 × tick$2 × Δ2) If ticks do not match the 1×1 is a hidden outright Write the ratio first then the entry Margin on the pack can look small and still ruin Correlation break is the actual risk

3. Energy cracks as example class

Energy cracks as example class. Context is not a trigger. Relative value is still two notional piles. Use context to veto, not to force a click.

When in doubt, name crack, crush, and other intermarket spreads as two products, two ticks again. If the sentence changed, you changed trades without admitting it. Related structure: free calculators.

4. Correlation that breaks

Correlation that breaks. Process beats mood. Write the rule that fires without a debate at the worst moment. If the rule is 'I'll see how I feel,' you do not have a rule.

Stops, flatten policies, and session boundaries belong in the same notebook as the thesis for Intermarket Spreads. If the stop is a price, convert it with listed glossary after you already know the tick or pip.

Relative value dies when the shared factor dies CL vs RBZC vs ZSGC vs SIWhen the factor breaks, both legs can lose

5. Margin on spreads vs outrights

Margin on spreads vs outrights. Fair warning: specs, leverage caps, and dealer rules change over time. The live document wins. Educational only. Not NFA, tax, or a solicitation.

Re-read primary docs before you add size on the object of Intermarket Spreads. See also previous lesson when the confusion is the venue layer, not the chart.

6. Mistakes, limits, takeaways

Mistakes: one-click spread tickets without knowing each leg's tick; copying size from a stream; ignoring costs; mixing this machine with crypto perpetuals or cash equities. Another: treating Intermarket Spreads as advanced because the vocabulary is long rather than because the dollar cap is written. If the sister asset class is the real mix-up, next lesson before you add size.

Maps go stale. Relative value is still two notional piles. If this lesson and the live spec or statement disagree, the live document wins.

Relative value only works if the relationship holds

Intermarket spreads pair two related products, crude oil against its refined products, or one stock index against another. The idea is that you are trading the relationship, not the direction of either market.

The danger is that relationships change. A spread that has been stable for months can move in a hurry when something hits one leg and not the other. Get the ratio right first, because two contracts with different units and tick values don't balance one for one, and work out what the position loses if the relationship breaks. If you can't describe the event that would break it, you don't yet know what you are trading.

Worth writing down

  • Object: crack, crush, and other intermarket spreads as two products, two ticks.
  • Failure: one-click spread tickets without knowing each leg's tick.
  • Dollars first, leverage last.
  • Skip the window you cannot survive.

Intermarket Spreads can remain a useful lesson and a poor live habit at the wrong size. Educational only. Not a recommendation to buy, sell, or hold any contract or pair.