Joe Ross' Spread Scan Newsletter

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Spread Scan Issue: February 13, 2008 - Volume 181

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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 their primary way of trading.

Each week we present spread trading examples and opportunities to help you become a more professional spread trader, and we provide you with helpful content of interest to traders:

Andy Jordan's Spread Scan Example:

This week we look at LCM8 – LCQ8: long June '08 Live Cattle and short August '08 Live Cattle

Today we consider a calendar spread in the meats: long June '08 Live Cattle and short August '08 Live Cattle (LCM8 – LCQ8). This spread has been in a downtrend since August ’07. The seasonal time window goes from approximately 02/05 through 03/07, and should help to move the spread higher. A breakout to the upside of the February ’08 high at -2.325 would also penetrate the upper bound of the downtrend channel (blue line) and could be the beginning of its seasonal up move.

Traders may want to enter the spread at a spread value of -2.3. Initial margin is $540 (reduced margin). Suggested risk is $400. Initial projected objective is $400, then a move higher. Basis is seasonal (app. 2/5 – 3/7) and a Ross Hook.

Previous Trades:

Andy Jordan's Trading Bites

Student's Question: "Andy, what should I do after closing out a trade?"

Andy: You must be disciplined in following the plan of your trade religiously. Once you have closed your position, you should record everything about the trade. Write down where you wanted to enter the trade, what you expected out of the trade, and what you actually did get out of the trade. Make sure to include notes that will help you learn from the trade, reasoning what actually took place once you entered the trade. Explain why the trade was a winner or a loser. If you keep detailed records, you can learn from past trades and increase your chances of recognizing your strengths and weaknesses. Build on your strengths and stay away from trades in which you have demonstrated weakness.

Another good thing to do is to keep a diary of your feelings. Learn which feelings go with the winning trades. Keeping such a diary will help you to become a more intuitive trader.

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You have subscribed to Joe Ross' Weekly Spread Scan Newsletter. If you have problems reading this newsletter, please follow this link: Spread Scan Issue: February 13, 2008 - Volume 181
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 immediately. 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. 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 their primary way of trading. Each week we present spread trading examples and opportunities to help you become a more professional spread trader, and we provide you with helpful content of interest to traders: Andy's Spread Trading Example Previous Trades Andy Jordan's Trading Bites How successful traders start their trading career... Next Live Chats for Traders with Joe Ross 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 Jordan's Spread Scan Example: This week we look at LCM8 – LCQ8: long June '08 Live Cattle and short August '08 Live Cattle Today we consider a calendar spread in the meats: long June '08 Live Cattle and short August '08 Live Cattle (LCM8 – LCQ8). This spread has been in a downtrend since August ’07. The seasonal time window goes from approximately 02/05 through 03/07, and should help to move the spread higher. A breakout to the upside of the February ’08 high at -2.325 would also penetrate the upper bound of the downtrend channel (blue line) and could be the beginning of its seasonal up move. Traders may want to enter the spread at a spread value of -2.3. Initial margin is $540 (reduced margin). Suggested risk is $400. Initial projected objective is $400, then a move higher. Basis is seasonal (app. 2/5 – 3/7) and a Ross Hook. back to top
Previous Trades: On February 02 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering an inter-market spread 100SMK8 – 50CK8 (elec.) at a spread value of $9,260. Initial margin is $1,148 (no reduced margin). Suggested risk is $750. Initial projected objective is $750, then a move to $11,500 or higher. Basis is seasonal (app. 2/8 – 4/1) and a 1-2-3 low. Comment: The volume seems to be ok in the elec. market, but I would enter/exit only around the close." Here's how we suggested managing this trade: 02/04 Suggest entering MOC tomorrow, if not already in the trade. 02/05 In? Suggested stop at $9,000. 02/06 Spread hit first suggested target. Suggest moving stop to $9,400. 02/07 Suggest moving the stop to $10,120. 02/08 Spread was trading at the suggested target of $11,500 intraday but was down on the close. 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, what should I do after closing out a trade?" Andy: You must be disciplined in following the plan of your trade religiously. Once you have closed your position, you should record everything about the trade. Write down where you wanted to enter the trade, what you expected out of the trade, and what you actually did get out of the trade. Make sure to include notes that will help you learn from the trade, reasoning what actually took place once you entered the trade. Explain why the trade was a winner or a loser. If you keep detailed records, you can learn from past trades and increase your chances of recognizing your strengths and weaknesses. Build on your strengths and stay away from trades in which you have demonstrated weakness. Another good thing to do is to keep a diary of your feelings. Learn which feelings go with the winning trades. Keeping such a diary will help you to become a more intuitive trader. back to top
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View last week's Spread Scan # 180 - February 06, 2008
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Next Chat: Wednesday, February 13, 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!