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It is my opinion that the only way you can really profit from spreads would be if you have dedicated servers setting next to the exchange with a 15 microsecond (not millisecond) ping to the exchange and execution server, and have some strong HFT algos working the market.
Firms profiting from spreads are doing so before any normal retail trader would ever even have a chance to click a button on your platform.
However, I'm not quite sure if we should Buy CL and Sell BRN, since this spread must had been caused by big money. You would have made money by just following them Buy BC and Sell CL. But now it seems to be too late in the game
I wouldn´t recommend to do anything like that either. Very high risk. But I know people who have traded these spreads (not with futures but with CFDs). Currently the spread is as large as never before. There is definitely big money in this game. I shouldn´t wonder if this spread extension has blown up some energy funds.
I understand CFD is still tied to the futures, so what is the usual behavior of the price when we approach rollover? Suppose I bought an Apr contract which is at a premium to the Mar contract, when the rollover happens next week, would there be a drastic drop in the price of the Apr contract?
In my last post I was writing about the spread between BRN and CL. I guess you now refer to the offset between current month and front month of the same instrument. In my opinion there is no usual behavior of price when we approach rollover. Sometimes the offset on the rollover day is large and sometimes it is very small.
CL is one of the most dangerous contracts to trade around expiry. The reason for this is the strange delivery site: a pipeline storage in Cushing, Oklahoma. Sometimes there is not enough product available and you will get a short squeeze, sometimes there …
