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Spread Scan Issue: July 23, 2008 - Volume 204
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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
- What Are Your Weaknesses in Trading?
- Next Joe Ross Live Chats for Traders: Wednesday, July 23, 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 WU8 – WZ8: long September '08 Wheat and short December '08 Wheat (ECBOT)
Today we consider a Chicago Wheat calendar spread (ECBOT): long September '08 Wheat and short December '08 Wheat (WU8 – WZ8). After coming back to normal volatility in April ‘08, the spread traded down to around -23, and stayed around that level for several weeks now. This seems to be a good level for an entry, just waiting until seasonality starts (around 08/06). The spread is trading close to full carry and therefore (theoretically) will not move much lower, but has a good chance to move higher in the next few weeks.
Traders may want to enter the spread at a value of -23 limit. Initial margin is $810 (reduced). Suggested risk is $300. Initial projected objective is $300, then higher. Basis is seasonal (8/6 – 8/29) and a possible bottom at around -24.
On July 14 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering an inter-market equity spread 100*SMZ8 – 50*SX8 at -$36,300 stop on close. Initial margin is $2,970 (reduced). Suggested risk is $2,000. Initial projected objective is $2,000, then a move to -$30,000 or higher. Basis is seasonal (7/14 – 8/15) and a 1-2-3 low. Comment: This is a high risk trade and is recommended only for traders with deep pockets."
Here's how we suggested managing this trade:
07/15 Suggested stop on close at -$37,500.
07/18 Suggested stop on close at -$36,800.
07/21 Spread moved up nicely today and it was possible to cash in the first lot with a nice profit. Suggested stop on close for the remaining lots at -$36.000.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, how much time do I need every day for spread trading?"
Andy: The trading itself doesn’t need much daily time. Approximately 10 – 20 minutes are required to check the charts each day, looking for new entries, checking your open positions, and giving your orders to the broker. Looking for the right trading opportunities needs much more time. Depending on the number of markets you want to trade, you will need several hours a week for your preparation. The most difficult part for a spread trader is finding the right trades out of hundreds of spread possibilities. Beginning traders find this part of spread trading especially difficult. If you are a subscriber of "Traders Notebook," this part is much easier because I do the searching for you. But don’t think you have to take all the trade recommendations! You still have to select the trades that are right for you, the trades with “your name on them.” Those who don’t subscribe to a newsletter need to focus on only a few markets in the beginning, so that they don't get lost among all the spread possibilities.
What Are Your Weaknesses in Trading?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.
DISCOVER WHAT COULD BE THE DEADLIEST
THREAT TO YOUR MONEY...
BEFORE IT'S TOO LATE!From Joe Ross
I am truly concerned about what I see. I see the word CRISIS in hundreds of the letters and correspondence that cross my desk. The U.S. is running out of “magic” tricks that can keep it going. There are some emergency actions the administration has performed, and is now performing, to keep the U.S. going at least until after the elections. But there are not many rabbits left in the U.S. hat that can be pulled out to save the nation from what ultimately must happen, and to save the world from the repercussions of what seems to be inevitable. The only thing you can do is to save yourself, and that is what the Traders Money Club™ is going to be all about.
The worst is yet to come, and you need to be ready.
In reading over the letters I receive, I see that people everywhere want help. They want protection from market shocks; they want good, sound advice. They want solutions.
I have been preparing for what's coming for a very long time. I truly hope you will join us as survivors. I am very optimistic in my belief that we don’t all have to go down with the ship. Follow this link and I'll tell you more about it....
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 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 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: "I really can't thank you enough for the training you gave me...The impact you have had on my life, now and in the future, is immeasurable and I am truly grateful for having met you in this lifetime." 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!