You
have subscribed to Joe Ross' Weekly Spread Scan Newsletter.
If you have problems reading this newsletter, please follow this link:
Spread
Scan Issue: August 29, 2007 - Volume 159
This email was sent to you by Trading Educators.
To ensure delivery to your inbox (rather than to bulk or junk folders)
please add info@spread-trading.com to your address book.To unsubscribe, scroll past the end of this newsletter and
click the "unsubscribe" link.Otherwise, welcome to this week’s issue of the
Joe Ross Spread Trading Newsletter.Each week we present spread trading examples and opportunities in order to help
you become a more professional spread trader.
Be sure you receive all your issues of Spread Scan so that you can continue to enjoy learning through the best free educational trading information available, and so that we can keep you informed about additional educational services and products to help you grow as a successful and profitable spread trader.
Today we consider a currencies spread: long September 07 Swiss Franc and short September 07 Japanese Yen (SFU7 – JYU7). After falling like a rock in July and beginning of August 2007, the spread finally stopped its down move at -5.6, and has been moving sharply higher since then. I personally would not enter at such a high level, but would wait for weakness of the spread. Please note – currencies spreads can move very fast, for or against you!
Traders may want to enter the spread at a value of -3.50 or better (below -3.50). Initial margin is $1,215 (reduced margin). Suggested stop at -5.6 (August low). Initial projected objective is -1.00, then higher. Basis is seasonal (app. 8/22 – 10/2) and a 1-2-3 low. Comment: Please calculate the risk on your own entry.
On August 13 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider selling November Soybeans at 879 ¾ stop market (if pit open > 880). Initial margin is $2,430. Suggested stop at 888 1/4 (app. $450). Initial projected objective is $450, then a move down to 825 or lower. Basis is a reversal bar and a gap. Comment: This trade is very unusual, but with the low risk it seems to be worth a try."
Here's how we suggested managing this trade:
08/14 Short at 379 ¾. Trade hit first suggested target. Suggest moving stop to break even.
08/15 Suggest exiting on a gap open. Suggest moving stop to 815. Comment: Suggest keeping a very tight stop. Don’t give back any profit.
08/16 Stopped at the open at 817.For more information about our daily newsletter, visit our Spread Website to find out more about Traders Notebook
Questions or Comments? Please email us: support@spread-trading.com
Student's Question: "Andy, how much volume do I need to trade without the risk of really bad fills?"
Andy: Without having the details about your trading, I will not be in a position to give you a concrete answer. It depend on the following factors:
- How many contracts are you trading? Are you trading 2 contracts or 20, or even 100, and in what market? Trading the bonds with 100 contracts shouldn’t be a problem, but you would have a hard time trading even 20 contracts in the E-mini Russell 2000.
- Are you a long- or short-term trader? When you trade short-term, even slippage of one tick can make the difference between winning or losing. If you trade long term, slippage of a few ticks should not make much of a difference.
- What markets are you trading? Trading the meats with a volume of over 1,000/day should be ok for every position trader. Trading the Eurodollars gets difficult with a volume below 5,000/day.
- Are you trading open outcry or electronic markets? When trading electronic markets, you can check the bid and ask on your trading platform, and you can see what fill you can expect. You can also see if there is enough volume at the moment you want to enter (bid/ask volume). You can also see the bid and ask of the open outcry markets, but most of the time this information is worthless because you cannot believe what you see. The only way to find out the bid and ask in any open outcry market is to call your broker.
To find out if the market fits with your trading style, talk to your broker. He should be experienced enough to give you some information about the market you want to trade. Also, test the market with a few contracts to see what fills you can expect. Then increase the number of contracts step by step as you feel comfortable.
©
2007 by Trading Educators, Inc
Contact
Us
1509 Jackson Drive
Cedar Park, TX 78613
Phone: 800-476-7796 or 512-249-6930
You
can e-mail us: support@spread-trading.com
Office hours are Monday - Friday 9 A.M. to 5 P.M., U.S.C.T.
Unsubscribe or change subscription
To change your subscription or to unsubscribe, scroll past the end of this
newsletter to click the "unsubscribe" link.
Disclaimer:
The Commodity Futures Trading Commission has asked us to advise you that trading spreads or outright futures is complex and carries a high degree of risk. While there is opportunity for incredible wealth building, there is also the risk of losing even more than you invested. Of course, that's not unlike most other businesses. But informed traders are the best traders!