Entrima
Training:
Coal – Quality Spread
Short description
Trade the coal quality spread.
Capacity
You act in the role of a market participant who applies spread trading, correlation trading and/or statistical arbitrage.
You act in the capacity of aggressor.
Tasks
Analyse the price differential between the two products, its minimum and maximum and the volatility of the quality spread.
Furthermore, your task is to trade the quality spread; setup the spread (a long versus short strategy between different grades) and liquidate it when financially suitable.
Analyse your financial performance.
Watch the Unrealised Result of an open position (“P/L-U”).
See the Realised Result of a closed position (“P/L-R”).
Check your Value at Risk (VaR) upon opening a position in one leg (contract), either long or short, and see the exposure (VaR) going down (risk mitigation) when you setup an opposing position (long versus short) in the other leg (contract).
Conclusion
At the end of the simulation, analyse your performance. See what you have done and when you have done this and whether it could have been optimised. This way, you learn and optimise your competences.