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Spread Scan Issue: January 09, 2008 - Volume 176
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Otherwise, welcome to this week’s issue of the Joe Ross Spread Trading Newsletter.
The Spread Scan weekly newsletter is designed to assist you in becoming a better more complete trader by showing you within the context of the markets, how to trade spreads.
In this newsletter you will see applications of spreading in the futures and commodity markets. Spreads are applicable to all futures markets including currencies, commodities, financial instruments, and stock indexes. It is even possible to trade spreads in the all-electronic intraday market using day trading techniques.
Spreads are based on seasonality, correlation, backwardation, chart patterns and simple observation. Spreads follow the Law of Charts™ and can be implemented using the Traders Trick™ entry.
In each issue of Spread Scan, you will find an upcoming spread trade for your consideration in the following week. You will also find a review of an existing or closed spread so you can see and learn how spread trades are managed.
Spreads offer you the most efficient use of your margin account of any other way to trade. Many traders find they like them so much that spreading becomes the primary way for them to trade.
Each week we present spread trading examples and opportunities in order to help you become a more professional spread trader, and we provide you with helpful content of interest to traders:
- Andy Jordan's Trading Bites
- Don't miss out any longer: make Trading Spreads part of your Trading Business
- Next Live Chats with Joe Ross - Every Wednesday in 2008
- 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.
Today we consider a calendar spread in the grain complex: long July '08 Chicago Wheat and short March '08 Chicago Wheat (WN8 – WH8). After being in free fall in August and September '07, the spread has recovered from its September low. But the sharp drop in December '07 tells us “be careful, this spread can move very fast!” That’s the reason why I recommend a risk of about $1,900 per spread contract. I personally would get out fast if the spread cannot make it higher in the days following the entry.
Traders may want to enter the spread MOC today. Initial margin is $2,295. Suggested risk is $1,900. Initial projected objective is $1,900, then higher. Basis is seasonal (app. 1/9 – 2/8) and a RH. Comment: This calendar spread has a lot of risk because of high volatility. I personally would take the trade in the electronic market.
On November 13 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering a currencies spread ADZ7 – CDZ7 at a spread value of -14.38. Initial margin for the spread is $1,490 (reduced margin). Suggested risk is $1,800. Initial projected objective is $1,800, then higher. Basis is seasonal (app. 11/4 – 1/10) and a 1-2-3 low. Comment: Suggest entering into the elec. contracts. We have to roll into March on about 12/10."
Here's how we suggested managing this trade:
11/14 Suggest entering MOC tomorrow.
11/15 In? Suggested stop at -14.80.
11/28 Suggest moving stop to -14.25.
11/30 Suggest moving stop to -13.25.
12/04 Suggest moving stop to -12.65.
12/06 We roll from the December into March contracts on Monday.
12/07 Suggest moving stop to -12.50. After roll into March on Monday suggested stop at -13.00.
12/10 Suggest moving stop to -12.80 (now March contracts).
12/12 Suggest moving stop to -12.10.
12/14 Spread hit suggested stop. Suggest exiting MOC on Monday of not already out.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, maybe this is too personal, but what are your resolutions for 2008 regarding trading?"
Andy: My worst enemy is still less than perfect “discipline”, which is also the most important factor in trading. Therefore, I will try to be more disciplined in 2008. As editor for our daily newsletter “Traders Notebook”, I try to satisfy all our customers. This means I am sometimes under pressure to keep finding new trades, especially for new subscribers or the ones not in an open trade. Although "Traders Notebook" is meant to be a teaching newsletter, everyone expects to receive an excellent performance over the year. One of our surveys at the end of last year told us that over 83% of our customers are trading profitably or breaking even, and fewer than 17% are losing any money. My resolution for 2008 is to improve the results even more, and to try to help every one of our subscribers to become a profitable trader. It can be done only by good trade selection, even if this means not giving any trade considerations from time to time. This will probably not be appreciated by highly active traders, but I am sure the ones who focus on performance will agree.
I hope all of you had some time to relax over Christmas and New Year, and you are now full of new energy. I wish everyone a year full of happiness and good trades in 2008.
Andy
HAVE YOU BEEN MISSING OUT ON ALL THE WONDERFUL BENEFITS OF SPREAD TRADING?
YOU DON'T HAVE TO MISS OUT ANY LONGER!Take Joe Ross' Spread Trading Seminar - the World's Only Complete Spread Trading Seminar is now available online.
Learn one of the most PROFITABLE and RELAXED ways to trade!If you haven't made Spread Trading part of your Trading Business yet, then we suggest that you take time to start doing so today. You need to be aware that the world is entering a NEW ERA of trading in which trading in commodities will become more important than trading in financial instruments.
Already copper, silver, gold, grains, natural resources have reached new all-time highs. Let’s face it, the world of trading does not consist of trading only stock indexes, currencies, and debt instruments. The shaky global financial situation has come close to melt-down a couple of times in the last two years. While stocks are up in double-digit numbers, commodities are up in triple-digit numbers, and the safest way to trade commodities is to trade spreads.
Spreads offer you the best and most efficient use of your trading capital. You will regularly find spreads that are trading for one-tenth the margin required to trade in any other market. That means you can trade 10 spreads using the same amount of capital you would have to put up to trade one futures contract.
The Number One enemy of every trader is that of "stop running." Spreads completely avoid stop running. There are no stops, and so stop running cannot occur. You can spread just about anything imaginable if you understand how spreading works.
Joe Ross and Trading Educators provide an easy way for you to learn everything there is to know about Spread Trading. Through Joe's original approach to Spread Trading, we can offer you a complete Spread Training Program. We don't want you to just buy and learn — we want to see how you succeed as a professional and profitable Spread Trader when you send us your testimony. Learn from a Pro and you will become a Pro.
Starting with Joe's Online Spread Trading Seminar, there is no need for you to travel far and spend lots of money for airline tickets, gasoline, or hotel accomodations. Learn comfortably at home or in your office. All you need nowadays to connect worldwide is a Computer or Laptop with Internet connection to download the seminar video onto your computer. You don't have to wait any longer. Follow this link to our Trading Educators site to find out more about the Online Spread Seminar with Joe Ross.
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Next Chat: Wednesday, January 16, 2008.
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Next Chat: Wednesday, January 16, 2008.
We hope you will join us!
Here is where you login to Joe's Euro Chat
You can also view our saved weekly Chat Logs in case
you missed any Chats but want to be up-to-date.
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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!