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Spread Scan Issue: April 02, 2008 - Volume 188
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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
- The hottest currencies around...
- Live Trading Seminars with Joe Ross in Italy
- Next Joe Ross Live Chats for Traders
- 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 CZ9 – CZ8:
long December '09 Corn and short December '08 Corn
Today we consider an intra-market calendar spread in Corn: long December '09 Corn and short December '08 Corn (CZ9 – CZ8). The spread has been trading in a trading range between -28 and -16 since January 2008, and is now at the lower bound of the range. Seasonality (03/31 – 04/28) should help to move the spread up to -20 or even higher.
Traders may want to enter the spread at a value of -28 or better. Initial margin is $405 (reduced margin). Suggested risk is $500. Initial projected objective is $500, then higher. Basis is seasonal (3/31 – 4/28) and a trading range. Comment: The spread is very liquid in the electronic market and can be traded directly at the eCBOT.
On March 16 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering a calendar spread HGN8 – HGK8 (elec.) at -1.10 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."
Here's how we suggested managing this trade:
03/17 Suggest entering MOC tomorrow, if not already in the trade.
Suggested stop on close at -1.25.
03/18 Suggested stop on close at -1.20. Time stop 03/20.
03/19 Suggested stop on close at -1.10.
03/19 Suggested stop on close at -0.95.
03/19 Suggested stop on close at -0.65.
03/26 Suggested stop on close at -0.50.
I personally would take profits with the first lot tomorrow, if not already done.
03/27 Suggested stop on close at -0.45.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, can you tell me what happens at the rollover? Is it something that happens automatically, or do I have to do something about it?"
Andy: The rollover is the time when most traders get out of the expiration month (to avoid delivery) to get back into the same market in another month. On the rollover, the volume moves from one month into another (not necessarily the next contract month). Even if there is a specific day when the rollover starts, it normally takes a few days until most traders have moved their positions into the new month. If you want to roll from one month into the next, you either have to do it on your own or tell your broker to do it for you. When you are long, he will sell your position and buy it back in the new month. When you are short, he will do it just the opposite. If you want to do it on your own, ask your broker about the rollover. He will notify you a few days before the rollover starts.
The Hottest Currencies around...
...are the the Euro, the Swiss franc, the Swedish krone, the Australian dollar, and the New Zealand dollar (kiwi). In 2007 the Swedish krone moved up more against the U.S. dollar than did any other currency in the world. It is still hot.
So far this year, the Swiss franc has been leading the way, and is up against the U.S. dollar more than any other world class currency, and has now gone beyond parity with the U.S. dollar. We believe the Australian dollar will be the next to reach parity with the U.S. dollar. These are truly incredible times in the currency markets.Some of these currency pairs are difficult to trade in the futures markets due to illiquidity. But as forex pairs, they are outstanding.
For those of you who wish to trade EUR/CHF, EUR/SKE, or AUD/NZD, we have an exciting new method that uses a single set of rules for profitably trading these 3 currency pairs.
If you purchase our new Forex Stealth trading method, don't expect sudden riches. You won’t even impress anyone with the clever way you trade. All you’ll do is just quietly and steadily take profits out of the forex markets, and consistently build your trading wealth—no more—no less!
The Forex Stealth method is simple. Why? Because all of our trading methods here at Trading Educators are simple — but very, very effective.
What can Forex Stealth™ do for YOU?
Find out more details about this method by following this link...
Live Trading Seminars with Joe Ross in Italy
To our Italian Chart Scan Subscribers:
Twice a year Joe Ross presents his Top-Notch Trading Seminars in Italy in cooperation with his Italian business associate, Francesco Fabi. May is that time of the year again, when you can partake of this eye-opening experience.
Joe's success derives from simplicity and truth. His success, his tools for success, and his experience of over 50 years of trading the markets are his legacy to anyone wanting to become a professional and profitable trader now and in the future.
It is Joe's primary goal to see his seminar attendees become successful traders. He opens their eyes to what is really happening in the markets and how they, as traders, can take profits from those markets. It is hard to become a winner without the right tools, but Joe passes on the tools necessary for true trading success.
You might want to consider attending these next seminars, and reserve your seat soon!
Spread Trading Seminar
Ravenna, May 16-17, 2008
If you wish to find out more detailed information or testimonials about this live seminar in Italy, please follow this link...Day Trading Seminar
Ravenna, May 18-19, 2008
If you wish to find out more detailed information or testimonials about this live seminar in Italy, please follow this link....
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
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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
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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!