Joe Ross' Spread Scan Newsletter

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Spread Scan Issue: April 16, 2008 - Volume 190

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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 500*FCK8 – 400*LCM8: long May '08 Feeder Cattle and short June '08 Live Cattle

Today we consider an inter-market equity spread in the meats (CME): long May '08 Feeder Cattle and short June '08 Live Cattle (500*FCK8 – 400*LCM8). The spread dropped down below its January low near the beginning of April, but seems to have recovered since then. The seasonal time window goes from April 11 until the end of May, and should help to move the spread even higher.

Traders may want to enter the spread at a value of $15,620 stop on close. Initial margin is $1,430. Suggested risk is $600. Initial projected objective is $600, then higher. Basis is seasonal (4/11 – 5/22) and a 1-2-3 low. 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.

Previous Trades:

Andy Jordan's Trading Bites

Electronic Spread Trading

Markets have changed quite dramatically in the last 12 months. Almost all markets are now trading at an electronic exchange such as Globex. In today’s short article I do not want to talk about the changes regarding the trade management; I want to focus on the changes regarding order execution, and what broker or trading platform to use.

When you ask me what broker you should use, I still recommend going with a “real person.” Even if you place all your orders online using a trading platform, it is important that you can talk to someone the moment you aren’t sure about what you are doing. Yes, you will pay a few dollars more on commission, but does it really matter? It is more important to have a helping hand when you need it. I would even go one step further and tell you to let your broker do the work for you, to get you in or out of your trades. Why should you hang in front of your computer all day long if your broker can do it for you?

I have been with our broker for over 6 years now, and even when I place my orders by myself I can call him or send him an email whenever I need his help.

I have added CQG Trader to my Xpress trading platform. Now I can now easily check bid/ask in all electronically traded spreads, and still place open outcry trades with Xpress. To be able to check bid/ask is very helpful because you can see the “real value” of your spread, and you can enter using a limit order to avoid slippage.

There are many different trading platforms you can use. Your choice depends on your needs. My recommendation is to test your trading environment before you make real trades, and try to find the right products for “your own trading”. Only if you feel comfortable with your tools will you feel comfortable with your trading.

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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 16, 2008 - Volume 190
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 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 *500FCK8 – 400LCM8:* long May '08 Feeder Cattle and short June '08 Live Cattle Today we consider an inter-market equity spread in the meats (CME): long May '08 Feeder Cattle and short June '08 Live Cattle (500FCK8 – 400LCM8). The spread dropped down below its January low near the beginning of April, but seems to have recovered since then. The seasonal time window goes from April 11 until the end of May, and should help to move the spread even higher. Traders may want to enter the spread at a value of $15,620 stop on close. Initial margin is $1,430. Suggested risk is $600. Initial projected objective is $600, then higher. Basis is seasonal (4/11 – 5/22) and a 1-2-3 low. 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. back to top
Previous Trades: On April 8 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider buying May Soybean Oil at 56.65 stop market (if pit open <=65.60). Initial margin is $2,025. Suggested stop at 55.20 ($870). Suggested first target at 57.70, then higher. Basis is a 1-2-3 low." Here's how we suggested managing this trade: 04/09 Long at 56.65. Market hit suggested first target. Suggested stop at break even. 04/11 Suggested stop at 59.30. 04/14 Suggest keeping stop at 59.30, if not already out overnight. Suggested final target at 63.30. 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 Electronic Spread Trading Markets have changed quite dramatically in the last 12 months. Almost all markets are now trading at an electronic exchange such as Globex. In today’s short article I do not want to talk about the changes regarding the trade management; I want to focus on the changes regarding order execution, and what broker or trading platform to use. When you ask me what broker you should use, I still recommend going with a “real person.” Even if you place all your orders online using a trading platform, it is important that you can talk to someone the moment you aren’t sure about what you are doing. Yes, you will pay a few dollars more on commission, but does it really matter? It is more important to have a helping hand when you need it. I would even go one step further and tell you to let your broker do the work for you, to get you in or out of your trades. Why should you hang in front of your computer all day long if your broker can do it for you? I have been with our broker for over 6 years now, and even when I place my orders by myself I can call him or send him an email whenever I need his help. I have added CQG Trader to my Xpress trading platform. Now I can now easily check bid/ask in all electronically traded spreads, and still place open outcry trades with Xpress. To be able to check bid/ask is very helpful because you can see the “real value” of your spread, and you can enter using a limit order to avoid slippage. There are many different trading platforms you can use. Your choice depends on your needs. My recommendation is to test your trading environment before you make real trades, and try to find the right products for “your own trading”. Only if you feel comfortable with your tools will you feel comfortable with your trading. back to top
How Successful Traders Start Their Trading Career A fundamental educational course for Futures Traders at ALL Levels Whether you've been trading for years or are just a beginner (or anywhere in-between), there is much basic detailed information about this business that most traders do not know, and are unaware that they need to know. You can increase your chances for trading success when you know and understand the background and workings of the business of trading. Joe's Futures Course arms you with vital information and insights - all contained in 21+ lessons of "From the Beginning." Joe Ross teaches you the basics so that you have the necessary fundamental and background knowledge and equipment to get you started, and to help you grow as a trader. The more you know, the better off you will be. You need to know the rules and the players; you need to know what can hurt you and what can help you. This course, Joe's Futures Course "From the Beginning," is designed for today's Futures Trader. For more details about the course or how to order, please follow this link to our website...
View last week's Spread Scan # 189 - April 09, 2008
Next Chat Dates for April: 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 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!