Joe Ross' Spread Scan Newsletter

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Spread Scan Issue: April 09, 2008 - Volume 189

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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 CTK8 – CTN8: long May '08 Cotton and short July '08 Cotton (ICE US)

Today we consider an intra-market calendar spread in Cotton (ICE US): long May '08 Cotton and short July '08 Cotton (CTK8 – CTN8). The spread has been in a strong down trend since March 2008 but seems to be losing momentum. There is a strong seasonal up move starting on April 8 and ending on April 24, which is also the First Notice day for the May '08 Cotton. You should be out not later then April 24 if you want to avoid delivery (you can still get out later, but this is usually more complicated and means extra costs). We are trying to “pick the bottom” with this trade, and I personally would use a close stop. You might also want to try again in case you get stopped out the first time.

Traders may want to enter the spread at a value of -3.35 stop on close. Initial margin is $300 (reduced margin). Suggested risk is $300. Initial projected objective is $300, then higher. Basis is seasonal (4/8 – 4/24) and a 1-2-3 low.

Previous Trades:

Andy Jordan's Trading Bites

Student's Question: "Andy, in one of the Spread Scan issues I read that spread traders have a much higher success rate than do day traders. How come? Any explanation why?"

Andy: Even if I do not want to generalise the following for each trader, there are some “general problems” in day trading. Here is a short list of why I personally think day trading is much more difficult than position or spread trading.

- Fast decisions: You have to make very fast decisions when you day trade, especially when you day trade very short time frames like 5-, 3-, or 1-minute charts. When you position trade you have much more time to think about the next step. Day traders too often don’t have a precise trading plan and trade on “gut feeling”.
- Trading for revenge: Very often you just want to “make back” your losses. This happens both in day and in position trading, but in position trading you have more time to calm down. Day traders very often take trades only for revenge, and lose even more.
- Picking only the best trades: It is very difficult to sit in front of a screen following the markets all day long, and not to trade before the market is ready. It is not very difficult to make a few ticks in the markets by scalping. Picking up a few hundred dollars with a ten contract lot is not a big deal, BUT it is very difficult to wait for the right moment!

I can only talk about my own experience, but whenever I compare my day trading with my position (spread) trading results, I can see more money comes with the longer term trades.

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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: April 09, 2008 - Volume 189
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 The Law of Charts™ and the Truth of Market Dynamics Live Joe Ross Trading Seminars 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 CTK8 – CTN8: long May '08 Cotton and short July '08 Cotton (ICE US) Today we consider an intra-market calendar spread in Cotton (ICE US): long May '08 Cotton and short July '08 Cotton (CTK8 – CTN8). The spread has been in a strong down trend since March 2008 but seems to be losing momentum. There is a strong seasonal up move starting on April 8 and ending on April 24, which is also the First Notice day for the May '08 Cotton. You should be out not later then April 24 if you want to avoid delivery (you can still get out later, but this is usually more complicated and means extra costs). We are trying to “pick the bottom” with this trade, and I personally would use a close stop. You might also want to try again in case you get stopped out the first time. Traders may want to enter the spread at a value of -3.35 stop on close. Initial margin is $300 (reduced margin). Suggested risk is $300. Initial projected objective is $300, then higher. Basis is seasonal (4/8 – 4/24) and a 1-2-3 low. back to top
Previous Trades: On April 1 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider buying the June Canadian $ at 0.9785 stop market (all sessions). Initial margin is $2,700. Suggested stop at 0.9665 ($1,200). Suggested first target at 0.9875, then higher. Basis is seasonal (4/9 – 5/2) and a reversal bar. Comment: Reversal trades are not to everyone’s taste, but they work quite well." Here's how we suggested managing this trade: 04/02 Long at 0.9785. Suggest taking profits on the first lot and moving stop to break even. 04/03 Market moved up nicely today. Position traders keep the stop at break even. More aggressive traders might want to move the stop below each daily bar. 04/04 Short term swing traders might want to move the stop higher to 0.9860. Position traders might leave the stop at break even. 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, in one of the Spread Scan issues I read that spread traders have a much higher success rate than do day traders. How come? Any explanation why?" Andy: Even if I do not want to generalise the following for each trader, there are some “general problems” in day trading. Here is a short list of why I personally think day trading is much more difficult than position or spread trading. - Fast decisions: You have to make very fast decisions when you day trade, especially when you day trade very short time frames like 5-, 3-, or 1-minute charts. When you position trade you have much more time to think about the next step. Day traders too often don’t have a precise trading plan and trade on “gut feeling”. - Trading for revenge: Very often you just want to “make back” your losses. This happens both in day and in position trading, but in position trading you have more time to calm down. Day traders very often take trades only for revenge, and lose even more. - Picking only the best trades: It is very difficult to sit in front of a screen following the markets all day long, and not to trade before the market is ready. It is not very difficult to make a few ticks in the markets by scalping. Picking up a few hundred dollars with a ten contract lot is not a big deal, BUT it is very difficult to wait for the right moment! I can only talk about my own experience, but whenever I compare my day trading with my position (spread) trading results, I can see more money comes with the longer term trades. back to top
The Law of Charts™ and the Truth of Market Dynamics If you do not want to experience loss after loss, and if you really want to become a successful trader, then you definitely should start trading with a defined concept. My students have verified that once you understand the markets, all you’ll ever need to trade them profitably is an understanding of the Law of Charts™ along with the dynamics of the market. In my online seminar you will find both, and a whole lot more. We present some indicators, but they are used in an unorthodox manner. People think that the more complicated something is, the better it is, but the truth of the matter is just the opposite. My seminar on The Law of Charts brings you the pure simplicity of what the markets are all about. Trading does not have to be complicated. In my online seminar you will be looking at the truth of the markets in virtually every scene. There is truth in every price bar you see, and in every group of price bars there is additional truth. It doesn’t matter whether you use traditional or candlestick price bars. You can see the truth with line or point-and-figure graphs. The truth is the truth, and you will find it on the charts. The Online Video Seminar will give you a very brief presentation of the Law of Charts formations and a very detailed explanation of how to implement the Law of Charts for making profits. This is what we really want to teach you, and what you want to come to understand and take advantage of. In addition, the online video seminar gives you the rationale behind the Traders Trick Entry™. You will learn what causes Ross Hooks™, and how to trade them. You will see how and when to use the Law of Charts when prices are in consolidation. There is really much, much more, because Joe Ross elaborates on the slides, giving you gems of information with each slide that you will not see in the free pdf Law of Charts material on our website, nor in any of his books. *Please follow this link and visit our website for more detailed information about Joe's popular and highly recommended Online Video Seminar on The Law of Charts...*
Live Joe Ross Trading Seminars 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. 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....
View last week's Spread Scan # 188 - April 02, 2008
Next Chat Dates for April: Wednesday, April 09, 2008 Wednesday, April 16, 2008 Wednesday, April 23, 2008 Wednesday, April 30, 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 Dates for April: Wednesday, April 09, 2008 Wednesday, April 16, 2008 Wednesday, April 23, 2008 Wednesday, April 30, 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!