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Spread Scan Issue: August 6, 2008 - Volume 206
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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
- High Percentage Spread Trades
- Next Joe Ross Live Chats for Traders: Wednesday, August 6, 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 LCZ8 – LHZ8: long December '08 Live Cattle and short December '08 Lean Hogs
Today we consider an inter-market spread in the meats (CME): long December '08 Live Cattle and short December '08 Lean Hogs (LCZ8 – LHZ8). After being in an uptrend from April ’08 through June ’08, the spread dropped back down to around 32.00 in July ’08. Can this be the turning point for the spread, and will the spread keep on trading higher due to its seasonality (08/04 – 08/29)?
Traders may want to enter the spread at a value of 34.30 stop on close. Initial margin is $1,262 (reduced). Suggested risk is $1,000. Initial projected objective is $1,000, then a move to 41.00 or higher. Basis is seasonal (8/4 – 8/29) and a hook. Comment: Please talk to your broker about where to place the order; elec. or pit.
On July 28 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider buying the October Live Cattle (Globex) at 105.00 stop market (if pit open <= 104.90). Suggested stop at 103.60 ($560). Suggested first target at 105.90, then higher. Basis is a TTE in front of a 1-2-3 low. Comment: Meats are usually difficult to trade."
Here's how we suggested managing this trade:
07/29 Long at 105.00. Trade hit suggested first target at 105.90. Suggested stop at break even.
08/04 Suggested stop at 105.70.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
How to Handle Fear
by Joe RossLet’s get one thing straight. Fear, for the majority of traders, is a very real thing. You have it, I have it. Others have it as well.
In order to become a professional trader, you must learn to deal with fear. The first step is to acknowledge that you have it, which is what you have done. Once you admit to fear, you can begin to deal with it.
When you notice the impulse to trade based on strong fear, it is usually best to step out of the trap by literally stepping out of the situation.
You need to get up, walk away from the computer. Turn off the television, take a walk, get something to eat, go outside and cut the grass, water the lawn, or do anything that will move you out of the fear/panic mode.
Don’t return to your trading desk until you have managed to achieve some emotional control over your fear/panic reaction. If you can’t get a grip on your fear, then don’t come back that day.
Most likely you will find that, even if you keep thinking about the miserable market conditions while you water the lawn, simply getting away from the keyboard and monitor is enough to make a difference. It removes the demand to take action, and gives you the mental space to gain perspective and let go of your impulsive, fear-based reaction.
Joe Ross has studied the markets from the point of view of how traders could make money steadily, getting the most efficient use of their money, while at the same time taking advantage of high percentage trades. Some of the best traders he knows are doing this, but you are not going to see them interviewed on any TV money show. They are too busy living the good life. But they are the most knowledgeable, successful, and respected among trading professionals who are "in the know."
Joe's idea was to find not only high probability trades that give traders the best use of their margin accounts, but also to find a way to avoid being a victim of stop running, that nasty enemy of most traders.
- Is it really possible to find trades that win 80% or more of the time?
- Is it possible to get fantastic leverage in the use your money?
- Is it possible to never have to worry about being stopped out?
How would you like to be able to take advantage of repetitive events to the point of 80% or greater accuracy time after time after time?
What would it be like if you could discover trades that trend, and trend, and then trend some more?
We've kept you in suspense long enough. The way of trading Joe is talking about has been successful for him throughout his entire trading career.
What he's talking about is learning to trade spreads, and he believes almost anyone, with the right training, has the potential to make money trading them.
Spread trading can be incredibly powerful, profitable,
consistent, and easy to implement.For years Joe has been spilling his guts on how people can succeed at trading, while giving away daily advice, weekly trades, answers to questions posted in his forum, and via weekly online chats. He's been doing this since 1989.
How or where does one start on this less risky way of trading?
By reading Joe's book Trading Spreads and Seasonals.
Joe's manual Trading Spreads and Seasonals is a self-contained training course designed to get you to an intermediate level of spread trading. Joe brings you down-to-earth with his vast knowledge of one of the most fundamental ways anyone can ever learn to trade.
You don't have to be afraid of the "speculative nature" of futures. The content of this book helps you structure "winning" trades the same ways the pros do.
Joe himself stated his reasons for writing this book. The text follows:
"Spread trading is virtually a lost art except among professionals, who, by the way, have never stopped using spreads since trading began.
"I encourage every one of my students and subscribers to read this book. Spread trading is probably the best way to trade that I've ever encountered. It beats the socks off both options and outright futures trading. It is far more relaxed than day trading. Much of the stress of trading is removed with spread trading."For more information on this manual, please follow this link...
Opportunities & Solutions for the Sinking DollarFollow this link to find out more about Joe Ross' Money Club
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: August 6
Join the chats in August:
Wednesday, August 13, 2008
Wednesday, August 20, 2008
Wednesday, August 27, 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: August 6
Join the chats in August:
Wednesday, August 13, 2008
Wednesday, August 20, 2008
Wednesday, August 27, 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!