Joe Ross' Spread Scan Newsletter

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Spread Scan Issue: September 26, 2007 - Volume 163

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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.

Andy's Spread Scan Example:

This week we look at ADZ7 – CDZ7.

Today we consider an inter-market currencies spread: long December Australian $ and short December Canadian $ (ADZ7 – CDZ7). The spread has been trading sideways since its strong downmove in August. Now we get a possible 1-2-3 low right on time, and the spread seems to be ready for its seasonal upmove (app. 09/24 – 10/15).

Traders may want to enter the spread at a value of -0.132. Initial margin for the spread is $1,884 (reduced margin). Suggested risk is $1,000. Initial projected objective is $1,000, then a move higher. Basis is seasonal (app. 09/24 – 10/15) and a 1-2-3 low. Please note - spreads in the currencies can move very fast. I would recommend this spread only for experienced spread traders with deep pockets!

Previous Trades:

Andy Jordan's Trading Bites

Student's Question: "Andy, although I have read about it, I still do not understand limits as they relate to spreads. Do I need to concern myself with them? Does limit up / down, and locked limit mean the market cannot move any higher or lower? Does this affect spreads? How? How often does this occur? Are there warning signs of this occurrence?"

Andy: Limit up or down means the market cannot (is not allowed to) move further up or down, as the case may be. You do not ever want to enter a spread at that time. You will not be able to put on both legs. If you are in a spread when the market goes limit, then usually all the months go limit, and so the spread remains flat and doesn’t move. If you are in a spread when the market moves limit, do not attempt to get out. You will be murdered if you do. Just stay in even if it goes slightly against you. It can go slightly against you because the front month may have greater limits than the back month. But by the time the spreads Close you should be okay, or mostly okay. The difference will not be great.

Every market is different. You get tons of limit moves in Bellies and in other illiquid markets like Lumber. I have no idea of how often limit moves occur. They vary by market and from year to year. Are there warning signs of a limit move coming? I have never seen any. By the time the news that causes a limit move reaches the market, it is too late to do anything about it.

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A beginning Spread Trader, just starting out in learning to trade spreads.

An experienced Spread Trader who wants to take advantage of all the features and benefits that Traders Notebook™ offers daily, such as directing you to spreads you might want to trade.

A Day Trader who wants to trade Stock Indexes and Currencies using Futures Spreads.


You have subscribed to Joe Ross' Weekly Spread Scan Newsletter. If you have problems reading this newsletter, please follow this link: Spread Scan Issue: September 26, 2007 - Volume 163 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. Andy's Spread Trading Example Previous Trades Andy Jordan's Trading Bites More Spread & Position Trade Opportunities - too good to pass up Contact Us 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.
Andy's Spread Scan Example: This week we look at ADZ7 – CDZ7. Today we consider an inter-market currencies spread: long December Australian $ and short December Canadian $ (ADZ7 – CDZ7). The spread has been trading sideways since its strong downmove in August. Now we get a possible 1-2-3 low right on time, and the spread seems to be ready for its seasonal upmove (app. 09/24 – 10/15). Traders may want to enter the spread at a value of -0.132. Initial margin for the spread is $1,884 (reduced margin). Suggested risk is $1,000. Initial projected objective is $1,000, then a move higher. Basis is seasonal (app. 09/24 – 10/15) and a 1-2-3 low. Please note - spreads in the currencies can move very fast. I would recommend this spread only for experienced spread traders with deep pockets! back to top
Previous Trades: On September 10 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering an inter-exchange spread KWZ7 – WZ7 MOC. Initial margin for the spread is $705. Suggested risk is $700. Initial projected objective is $700, then a move to break even or higher. Basis is seasonal (app. 9/10 – 10/5) and a RH. Comment: We got hurt badly on the last entry. I personally would calculate the risk even higher (app. $1,000) due to volatility in the grain markets." Here's how we suggested managing this trade: 09/11 In? 09/17 Suggest taking some money from the table, if not already done, and moving stop to break even. 09/21 Suggest moving stop to -27. 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
Andy Jordan's Trading Bites Student's Question: "Andy, although I have read about it, I still do not understand limits as they relate to spreads. Do I need to concern myself with them? Does limit up / down, and locked limit mean the market cannot move any higher or lower? Does this affect spreads? How? How often does this occur? Are there warning signs of this occurrence?" Andy: Limit up or down means the market cannot (is not allowed to) move further up or down, as the case may be. You do not ever want to enter a spread at that time. You will not be able to put on both legs. If you are in a spread when the market goes limit, then usually all the months go limit, and so the spread remains flat and doesn’t move. If you are in a spread when the market moves limit, do not attempt to get out. You will be murdered if you do. Just stay in even if it goes slightly against you. It can go slightly against you because the front month may have greater limits than the back month. But by the time the spreads Close you should be okay, or mostly okay. The difference will not be great. Every market is different. You get tons of limit moves in Bellies and in other illiquid markets like Lumber. I have no idea of how often limit moves occur. They vary by market and from year to year. Are there warning signs of a limit move coming? I have never seen any. By the time the news that causes a limit move reaches the market, it is too late to do anything about it. back to top
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View last week's Spread Scan # 162 - September 19, 2007
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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!

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