If you have problems reading this newsletter, please follow this link:
Spread Scan Issue: March 26, 2008 - Volume 187
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 Jordan's Trading Bites
- Professional Help for Serious Traders
- 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 500*FCJ8 – 400*LCM8: long April '08 Feeder Cattle and short June '08 Live Cattle
Today we consider an inter-market equity spread in the meats: long April '08 Feeder Cattle and short June '08 Live Cattle (500*FCJ8 – 400*LCM8). It looks like this spread has found its bottom around $14,500 (January and March low). Seasonality starts around 03/10 and should help the spread to move up north. A stop level could be the March low at $14,495; target at $17,250 or even higher.
Traders may want to enter the spread at Market on Close today. Initial margin is $2,430 (no reduced margin). Suggested risk is $1,000. Initial projected objective is $1,000, then higher. Basis is seasonal (03/10 – 04/24). Last Trading Day of April FC is 04/24. Because of the different values of each unit move of Feeder Cattle and Live Cattle, we have to multiply the buy side by 500 and the sell side by 400 to get the right equity chart. The spread is 1:1.
On March 16 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider selling May Copper at 378.90 stop market (all sessions, if elec. open >= 379). Initial margin is $7,763. Suggested stop at 385 (app. $1,500). First suggested target at 372, then lower. Basis is a TTE in front of a 1-2-3 high. It looks like copper is the weakest market of the metals at the moment. Comment: Copper is a “very expensive” market and recommended only to those with deep pockets.
Here's how we suggested managing this trade:
03/17 Short at 378.90. Trade hit suggested target. Suggested stop at break even.
03/19 We are heading into a long weekend. Maybe you want to cash in some (or the complete) position. Suggested stop at 365.
03/20 I personally would use a very close target at 356, if not already out of the trade.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: "I am trading a really small account and very often I can trade only one contract. What would you recommend I do?"
Andy: Trading only one contract is really tough. You are extremely limited in managing your trade. You have only two choices: in or out of the trade. Trading multiple contracts gives you much more flexibility. You can take some money from the table without exiting the trade completely whenever you think it is necessary. Or you can enter the trade with only the first lot to see if the spread is going your way before you add on another position. I personally would not like to take trades where I could trade only one contract. Don’t try to “reduce the risk” just to make sure you can then trade more contracts. This is for sure the wrong way! Skip the trade and wait for the ones with less risk. You can then trade more contracts and you will be much more flexible.
Serious Traders Seek Professional HelpDon't spend thousands of dollars in vain.
Train with Joe Ross.It has always amazed us that normally astute professional individuals and business people will embark on a course of action as serious as trading without seeking professional help. By the thousands, in trying to figure it out for themselves, they lose far more money than the cost of our training. People spend thousands of hours and dollars in a vain attempt to go it on their own. No one is beyond the need for professional help when it comes to futures trading.
Even professional traders come to us for help and additional training. Let us help you as well.
Joe Ross offers you a sincere and devoted commitment to teaching and showing you the truth and simplicity in trading.
Schedule your private tutoring time with Joe Ross in person or online. The private training sessions, for traders at any level, pull together all the information from Joe's books and the web courses, and make it more individualized and usable. These sessions go beyond anything you have seen or heard before; material that is simply not covered in futures, stock, or forex trading books or other sources commonly available for traders today.
For instance, do you know of anyone who teaches you about how the market movers really work, what truly takes place in the markets, and how to neutralize the market movers' advantage?
The sessions with Joe are highly individualized. Not only do you learn the important basics, but all of it is focused towards YOUR NEEDS. You will never go away empty-handed (or empty-headed) from a Joe Ross training session.
The objective of the one-on-one session is to give you the information you need in order to survive when trading commodity futures, and to learn to "get paid to trade" as Joe always advocates. Please follow this link now to learn more about private tutoring with the master trader himself...
Next Chat: Wednesday, April 2, 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, April 2, 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.
Contact Us
1509 Jackson Drive
Cedar Park, TX 78613
Phone: 800-476-7796 or 512-249-6930
Office hours are Monday - Friday 9 A.M. to 5 P.M., U.S.C.T.Questions or Comments? Please email us: support@spread-trading.com
© 2004-2008 by Trading Educators, Inc
Unsubscribe or change subscription
To change your subscription or to unsubscribe, scroll past the end of this
newsletter to click the "unsubscribe" link.
Joe Ross & Trading Educators, Inc. own all rights, title and interest to this publication. No part of this publication may be reproduced, in whole or in part, or by any means, mechanical or electronic, without permission in writing from the Publisher.You have no rights to resell, reprint, reproduce, or digitize Spread Scan Newsletter. While all attempts have been made to verify information provided in this publication, neither the author nor the Publisher assumes any responsibility for errors, omissions, or contrary interpretation of the subject matter herein.
This publication is not intended for use as a source of any advice such as legal, medical, or accounting. The Publisher wants to stress that the information contained herein may be subject to varying international, federal, state and/or local laws or regulations. The purchaser or reader of this publication assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, including international, federal, state and local, governing professional licensing, business practices, advertising and all other aspects of doing business in the US, Canada, or any other jurisdication is the sole responsibility of the purchaser or reader. Neither the author nor the Publisher assumes any responsibility or liability whatsoever on the behalf of any reader of these materials.
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!