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Spread Scan Issue: May 28, 2008 - Volume 196
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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(TM) and can be implemented using the Traders Trick(TM) 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
- Have you discovered your weaknesses in your Trading Career?
- Next Joe Ross Live Chats for Traders: Wednesday, May 28, 2008
- About Joe Ross and Andy Jordan
- TE TRADERS FORUM
- 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 LHQ8 - LHM8: long August '08 Lean Hogs and short June '08 Lean Hogs
Today we consider a Lean Hogs calendar spread: long August '08 Lean Hogs and short June '08 Lean Hogs (LHQ8 - LHM8). After a nice uptrend at the beginning of 2008, the spread reached its highest value of 5.85 in March ´08. Since then, the spread has been in a downtrend channel, reaching break even in May ´08. Can seasonality (05/16 - 06/03) help this spread to move back up to the March high?
Traders may want to enter the spread at a value of 0.8 stop on close. Initial margin is $945 (reduced margin). Suggested risk is $680. Initial projected objective is $680, then a move to 5.0 or higher.
On May 11 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering a Cocoa (ICE) calendar spread CCU8 - CCN8 at -17 stop on close. Initial margin is $350 (reduced margin). Suggested risk is $150. Initial projected objective is $150, then a move to 20 or higher. Basis is seasonal (5/12 - 6/2) and a hook."
Here's how we suggested managing this trade:
05/12 In? Suggested stop on close at -30.
05/13 Suggested stop on close at -23.
05/14 Suggested stop on close at -14.
05/19 Don't know the close yet. Please adjust the stop on your own.
05/20 Suggested stop on close at -1.
05/21 Suggested stop on close at +4.
05/22 Suggested stop on close at +5.
05/23 Suggested stop on close at +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 about paper trading? Does it fit into professional trading somehow?"
Andy: Yes, I personally think it does. Paper trading cannot replace real trading for many (mainly emotionally based) reasons, but it can be an important part of the process of finding and trading a new method. First you might have an idea about how to trade a market based on price bars, candlestick charts, indicators, or whatever you use for your trading. Next you would back-test it with older data. You would do it manually or by using a back-testing software. After being satisfied with your back-testing, you could start to do some paper trading. Many trading ideas or methods seem to work pretty well during back-testing, but cannot make any money in the "real world of trading". Paper trading can definitely help to find the weakness of any method, but you should take the paper trading seriously. Only if you are satisfied with the paper trading results should you start trading your method with real money. Start with very low risk to see how your method performs with the reality of actual money on the line. Then, if it seems to perform well during trading it for a while with only low risk, you can increase your risk based on your money management. By the way, you should go through this paper trading process with every new method you want to trade, no matter whether it is your own method or a method you have just bought!
Have You Discovered Your Weaknesses in Your Trading Career?LIKE A HOT KNIFE THROUGH BUTTER
Would you like to turn all your hours of effort in studying the markets into profitable trading? Do you want to rid yourself of the mental gridlock that often plagues traders, to truly become an intuitive trader, gliding through your trades like a hot knife through butter?
If your answer is YES, then this might be the most important letter you'll ever read...
AN APPROACH WITH WRONG MINDSETS
We don't believe that TRADING is your problem; neither is it for most other participants in the market. Most traders know how to trade, BUT they don't have the right mindset and approach for trading the markets.
FACT: Did you know that 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.
If you know that you are not part of the 10% of traders who come out winning, even though, initially, you might enter your trades on the right side, where then do YOU go wrong?
Joe Ross answers this and many more questions in Trading Is a Business. He shows how YOU can be on the side of the winning traders and consequently, with the correct approach and mindset, become a successful trader. Plus, he shows you how to properly manage your trades, your money, and yourself.
You really should get this book today -- but be warned: Joe himself says that this can be a nasty book for some traders. 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...
So what will YOU do?
Be of good courage. Joe assures you that if you read through it, learn and apply it, your trading will become much easier, more pleasant, and more relaxed. You will also understand the markets better and see what is REALLY going on.
FRESH PERSPECTIVES - Ready for YOUR active participation.
Joe's live chats are an incomparable service from Trading Educators. The chats encourage forward-thinking, and inspire others by what is shared.
Gather up your questions and comments, and "meet" other traders on line. Joe Ross will answer everything he can - come and join either his U.S. Live Chat or his Euro Live Chat:
Next Chat Date for May and June:
Wednesday, May 28, 2008
Wednesday, June 04, 2008
Wednesday, June 11, 2008
Wednesday, June 18, 2008
Wednesday, June 25, 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 Date for May and June:
Wednesday, May 28, 2008
Wednesday, June 04, 2008
Wednesday, June 11, 2008
Wednesday, June 18, 2008
Wednesday, June 25, 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.
ABOUT JOE ROSS:
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Joe Ross has been trading and investing since his first trade at the age of 14, and is a well known Master Trader and Investor. He has survived all the up and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits. Joe Ross is the discoverer of the Ross hook(TM), and has set new standards for low-risk trading with his concepts of The Law of Charts(TM) and the Traders Trick Entry(TM). Joe was a private trader and investor for much of his life, but a serious health situation in the late 80's caused him to shift his focus, and that is when he decided to share his knowledge. After his recovery, he founded Trading Educators in 1988, to teach aspiring traders how to make profits using his approaches to trading. Joe Ross has written twelve major books and countless articles and essays about trading. All his books have become classics, and have been translated into various languages. His students from around the world number in the thousands. His file of letters containing thanks and appreciation from students on every continent (except Antarctica) is huge. As one student, a successful trader, wrote: "Your mastery of teaching is even greater than my mastery of trading." Joe Ross holds a Bachelor of Science degree in Business Administration from the University of California at Los Angeles. He did his Masters work in Computer Sciences at the George Washington University extension in Norfolk, Virginia. He is listed in "Who's Who in America." After 5 decades of trading and investing, Joe Ross still tutors, teaches, writes, and trades regularly. Joe is an active and integral part of Trading Educators. He is the primary author and Editor-in-Chief of the company's newsletters: Chart Scan(TM), Spread Scan(TM) , and Traders Notebook(TM). He is also the host of the free Traders Live Chat, the free European Chat for Traders, and the moderator of his popular trading forum. |
Joe's philosophy for helping traders is:"Teach our students the truth in trading -- teach them how to trade""Give them a way to earn while they learn, realizing that it takes time to develop a successful trader."
Joe sets forth the mission of Trading Educators as follows:
- To show aspiring futures traders the truth in trading by teaching them how to read a chart so that they can successfully trade what they see, and by revealing to them all of the insider knowledge they need in order to understand the markets.
- To enable them to trade profitably by training them to properly manage their trades as well as their mindset and self-control.
For information about Joe Ross and Trading Educators,
please follow this link...
ABOUT ANDY JORDAN:
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Educator for Spread Trading and
Editor of Traders Notebook & Spread Scan Andy Jordan made his first option trade at the age of 18. Since then he has been fascinated by the world of trading. In 2002 he met Joe Ross, and became interested in spread trading. Andy was then intensively tutored by Joe Ross and personnel at Trading Educators. Even though Andy has shown through live chats and in several trading journals that he is able to day trade today's markets, spread trading has always been his favorite. In addition to his own spread trading activities, Andy is the editor of Traders Notebook. For those interested in one-on-one personal coaching, Andy has developed and instructs a one-week online course in spread trading "Trade with a Pro," during which he demonstrates all aspects of trading from choosing the trades on through how and when to enter the trades, manage the trades, and exit the trades. Andy has developed a number of trading methods, among which are Andy's E-mini 40 and a T-Bond trading method. A ndy Jordan was born 1965 in Germany, but is currently living in the Caribbean. He has studied mathematics and business administration in Regensburg and Hagen, and holds a PhD in mathematics.
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We created our Trading Community Forum for the purpose of providing positive, uplifting educational material to traders who want to participate. There is much to be gained from the collective wisdom and experiences of those who choose to participate. Let's share what we have learned that has been helpful. Let's all push forward to exchange new ideas and interesting concepts. |
If you are willing to share what works for you, then we welcome you. Your ideas may help someone else on their way to success. In turn, you may pick up an idea or piece of information that will help you to become a better trader.
Joe Ross has been trading the markets, virtually all of them, beginning well over 5 decades ago. He is now in his seventh decade of life, so he has the experiences of many years that he is willing to share, as he is already doing through his books, seminars and newsletters.
We hope you decide to join us in our forum to make your contributions as well.
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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!