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Spread Scan Issue: March 19, 2008 - Volume 186
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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 Trading Bites
- Are you ready for a resurrection?
- 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.
Today we consider a Copper calendar spread: long July '08 Copper and short May '08 Copper (HGN8 – HGK8). This spread moved down in January and February 2008 after going sideways in November and December 2007. Now it seems the spread is in an uptrend since February 21. The seasonal time window is very small and goes from 03/13 until 04/08. Will the spread move higher after a breakout of its March high at -0.65?
Traders may want to enter the spread at a spread value of -0.60 stop on close. Initial margin is $108 (reduced margin). Suggested risk is $250. Initial projected objective is $250, then higher. Basis is seasonal and a RH. Comment: Copper isn’t a very liquid market, but the electronic spread should be ok.
On March 9 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering a calendar spread FCJ8 – FCK8 (pit) MOC on Monday 03/10. Initial margin is $473. Suggested risk is $350. Initial projected objective is $350, then higher. Basis is seasonal (2/29 – 4/7) and a 1-2-3 low.
Comment: The elec. Feeder Cattle market is not very liquid. I suggest taking the trade in the open outcry market."
Here's how we suggested managing this trade:
03/10 In? Suggested stop on close at -3.80.
03/12 Suggested stop on close at -3.70.
03/13 Suggested stop on close at -3.60.
03/17 Spread hit suggested target. Suggested stop on close at -3.10.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, what do you think is the most important factor to become a successful spread trader?"
Andy: There are obviously many different factors involved in becoming a good trader or spread trader, but I personally think self-discipline makes all the difference. When I look at my trading journal, I can see that my trade selection is good. Nothing to complain about there. But from time to time I can see some notes like “I exited the trade because I thought the market will not go higher” or “I did not exit the trade fast enough." Do you find the same notes in your trading journal? I am sure we all can find them. We have to uncover our weaknesses when we trade, and then we have to find a work-around or a way to get rid of them. This is probably the most difficult part of trading.
It's Resurrection Time for Successful TradersWill you take advantage of Joe Ross' special on his trading manual Trading Is a Business?
If so, then let us quote the warning that Joe printed near the front of this book:
"This is a nasty book.
It will take you apart at the seams, point out your weaknesses as a trader, and then attempt to resurrect you as a successful, self-disciplined person who can control his trading in a businesslike manner.
However, if you cannot stand constructive criticism, or if you do not wish to succeed as a trader, Joe suggests you don't consider buying it in the first place, and ignore this."
So what will YOU do?
Trading is not the problem for most of the participants in the market. Most traders know how to trade, BUT they don't have the right mindset and approach for trading the markets. 80% of traders are on the right side of a trade when they enter the markets, and yet, according to statistics, only 10% end up being successful in this business; the rest lose their money. Where do they go wrong? Joe Ross will answer this and many more questions, plus, in Trading Is a Business, he shows how YOU can become a successful trader. He shows you how to properly manage your trades and yourself.
Trading will become much easier, more pleasant, and more relaxed. Why? Because you will understand the markets and what is really going on. If you decide to purchase Trading Is a Business within the next 48 hours, we urge you to redeem the coupon code csntiabs0308 — read below:
Next Chat: Wednesday, March 19, 2008
We hope you will join us!
Here is where you login to Joe's Wednesday Chat
You can also view our saved weekly Chat Logs in case
you missed any Chats but want to be up-to-date
Next Chat: Wednesday, March 19, 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!