Reading Forecasts and Trading
Interpreting WeatherEdge forecasts and translating them into trading positions.
Trading with WeatherEdge.
Forecast Dashboard.
Shows: 10-day temperature forecast vs consensus, precipitation probability, and deviation score (how far our model differs from market expectations). Large deviations = trading opportunities.
Trade Signals.
- Cold Signal: Temperature forecast 5+ degrees below consensus. Trade: long natural gas, long heating oil.
- Heat Signal: Temperature forecast 5+ above. Trade: long electricity futures, long utility stocks.
- Storm Signal: Hurricane or severe weather probability high. Trade: long insurance volatility, short coastal REITs.
Position Sizing.
Weather trades are binary — either the forecast verifies or it does not. Size conservatively: 1% of portfolio max per weather trade.