Nov

20

The Basis, from Jeff Watson

November 20, 2009 |

The basis is often the most overlooked part of commodity trading. The importance of a solid understanding of the basis cannot be repeated enough. An excellent article for the novice or anyone else can be found on TopProducer-Online.


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  1. Kermit Johnson on November 27, 2009 12:12 pm

    I have looked at basis in commodities extensively, including using values for basis as inputs to neural nets. I have only found one commodity where this is valuable, and that was only after looking at it relative to where long term averages show that it normally would be for each week of the year. The tricky part of this is to come up with a continuous contract to compare with the cash quotes before including it in any models.

    Of course, it is valuable in marketing cash commodities.

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