Short bottom , long top futures

General
1

Hi,
At time 3:12 for bottom 2 deciles and top 2 deciles, which is contango and which is backwardation? And what does it mean by Short Bottom Futures and Long Top Futures?

Course Name: Momentum Trading Strategies, Section No: 20, Unit No: 4, Unit type: WaterMarkVideo

2

Hi,

You are looking at future spot ratio of asset. Higher the value, higher the rank. Most contango assets will have higher rank. Whereas, lower the value, lower the rank.
Now, higher ranks will be in the bottom deciles, while lower ranks will be in top deciles.

You go short on contracts with the future spot ratio in the bottom two deciles. You simultaneously go long on all contracts who’s future spot ratio is in the top two deciles.

Hope this helps.