The value of your investments can go down as well as up. Losses can exceed deposits on margin products. Please ensure you understand the risks.
The Spread study is used with comparable instruments that are trading with a spread between them such as:
- two equities in same industry sector
- the A and B share for the same company
- two commodities futures
The spread can widen and narrow and can be used for Spread Trading where the trader sells one instrument and buys the other when the spread is wider than historical norms for example.