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Spread Scan Issue: July 2, 2008 - Volume 201
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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
- Better tools, better knowledge, better insight for any Spread Trader:
Andy's Online Spread Training will equip you to master Spread Trades and
shows you how to increase your profits... - Next Joe Ross Live Chats for Traders: Wednesday, July 2, 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 HGZ8 – HGU8: long December '08 Copper and short September '08 Copper
Today we consider a Copper calendar spread (COMEX): long December '08 Copper and short September '08 Copper (HGZ8 – HGU8). The spread has been in a nice uptrend since February ’08. After retracing from its June high down to -3.00, it seems to be ready to move higher again in accordance with its seasonality from 07/07 until 08/19.
Traders may want to enter the spread at a value of -1.9 stop on close. Initial margin is $108 (reduced margin). Suggested risk is $250. Initial projected objective is $250, then higher. Basis is seasonal (7/7 – 8/19) and a 1-2-3 low.
On June 22 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering a Heating Oil (NYMEX) calendar spread HOZ8 – HOQ8 at 11.20 stop on close. Initial margin is $250 (reduced margin). Suggested risk is $700. Initial projected objective is $700, then higher. Basis is seasonal (6/23 – 7/24) and a Ross Hook."
Here's how we suggested managing this trade:
06/23 Suggested stop on close at 10.14.
06/24 Suggested stop on close at 10.70.
06/25 Suggested stop on close at 11.28.
06/30 Suggested stop on close at 12.00.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, why is there such a big difference between a spread chart using pit contracts and the one showing electronic contracts? Sometimes the pit chart looks nice and smooth, and the electronic chart looks much more volatile and completely different."
Andy: When we look at a spread chart, we don’t see the real values of the spread because we usually don’t get the spread data from our data provider. What happens with our spread charts is that the spread gets calculated artificially. We get data for leg A and data for leg B, and then we calculate the spread A – B through a simple mathematical subtraction. But what happens if leg A of our spread above doesn’t trade in the last 10 minutes before the close, but leg B shows a lot of movement? The answer is, what we see on the chart is not the real value of the spread as long as we don’t have a final trade on both sides. Pit charts and electronic charts differ most often when we look at illiquid spreads. The difference exists because only in the pit contracts do we have a settlement price. Even if there is no trade in leg A, they calculate the settlement price for A. This makes the chart look much smoother than the electronic contracts, where they show only the last tick on leg A and leg B. This is the reason why I prefer to use pit contracts for illiquid spread charts.
Better tools, better knowledge, better insight
for any Spread Trader:
Andy's Online Spread Training will equip you to master Spread Trades and shows you how to pick up your profits.Where do you stand in your trading? You may have invested your money and countless hours struggling to find a winning way to trade.
You may even have previously looked into spread trading, but you have not been able to figure exactly how to use spread trading to be consistently profitable.
If so, then all you need is a helping hand to turn your trading into a successful business.
Learn, train, and interact online with a professional Spread Trader for ONE full training week.
SPREAD TRADING is one of the most consistently reliable, potentially profitable, and safest ways to achieve real SUCCESS in trading.
Here is the knowledge you will gain through your personal Spread Training:
- How to select the right markets and the right spreads. Andy will show you five distinct ways to dig out high probability spreads.
- How to use seasonal and correlation charts to find high percentage trades.
- How to use backwardation, observation, and chart formation to pluck out really great trades.
- How to use trend lines and resistance and support areas in your spread trading.
- How to enter or exit the spreads with regard to the market and the volume conditions. Andy will work with you to develop the best ways for YOUR trading.
- How to develop, step-by-step, a trading plan including money management, risk management, and trade management.
- And much, much more. Let yourself plunge into the depth of the spread trading knowledge Andy has to offer you!
Follow this link to find out more and schedule your time with Andy today...Learning, practicing, and having Andy Jordan tackle the questions you've always wanted answered - can you think of a better way to become a successful spread trader?
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 Dates for July:
Wednesday, July 02, 2008
Wednesday, July 09, 2008
Wednesday, July 16, 2008
Wednesday, July 23, 2008
Wednesday, July 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 July:
Wednesday, July 02, 2008
Wednesday, July 09, 2008
Wednesday, July 16, 2008
Wednesday, July 23, 2008
Wednesday, July 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.
ABOUT JOE ROSS:
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:
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. Andy 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!