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Spread Scan Issue: September 3, 2008 - Volume 210
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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
- Back by popular demand: Get trained to trade Options!
- Next Joe Ross Live Chats for Traders: Wednesday, September 3, 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 LCG9 – LCZ8: long February '09 Live Cattle and short December '08 Live Cattle
Today we consider a Live Cattle (Globex) calendar spread: long February '09 Live Cattle and short December '08 Live Cattle (LCG9 – LCZ8). After a choppy downmove in June and July '08, the spread seems to bottom out around break even. Seasonality (09/03 – 11/05) should help this spread to move back up to 2.0 or even higher. Break even could be a logical place for an initial stop.
Traders may want to enter the spread at a value of 0.55 stop on close. Initial margin is $810 (reduced). Suggested risk is $400. Initial projected objective is $400, then a move higher. Basis is seasonal (09/03 – 11/05) and a trading range.
On August 5 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering a Lean Hogs option bear spread; buying LHV8 72 put and selling LHV8 68 put at a premium of 1.0, buy side. The maximum risk of this spread is $400 and the maximum profit is $1,200. Basis is seasonal (8/5 – 9/5) for LH moving down. Comment: LH seems to be ready to move lower but the timing could be the problem. That’s why I want to try this option bear spread."
Here's how we suggested managing this trade:
08/06 In at 1.0.
08/14 Spread is at around 0.75. It looks like LH will move lower. Possible short trade for outright futures traders.
08/15 Spread closed at 1.05.
08/21 Spread closed at 1.20.
08/26 Spread closed at 1.125.
08/27 Spread closed at 1.95. I tried to cash in at 2.00 but didn’t get filled. I will try again tomorrow.
08/29 I got filled at 2.0 today.
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
10 Spread Trading Tips
Our broker, Marco, has created a helpful document for those new to spread trading. In the next few issues of Spread Scan, I want to share some of his trading tips with you. If you need any further information about the broker we use, please get in touch with us at support@spread-trading.com.
Dear Trader:
During all the years I have been helping customers with their trading needs, I have never stopped looking for ways to improve our trading methods or to make trading as effective and profitable as possible. Joe Ross and Andy Jordan have created a solid approach to trading that can help beginners as well as professional traders to transform futures trading into a profitable and enjoyable experience. Together we have helped hundreds of clients become better traders and better overall investors. My job is to make sure you are able to transform the theory into reality, and to help you to execute your trading plan as effectively as possible.
Spread trading involves a unique set of rules and market dynamics unknown to most traders, even to many professional traders. Here is a short review of trading tips that I hope will be helpful.
1) Start small!
Remember: if you are a beginning trader or new to spreads, leverage always works against you! Always start smaller than you think you can handle. If you have enough capital to trade 10 lots, trade for awhile with 3 or 4 lots.2) Trade multiple lots (no, it does not contradict rule #1 — read further).
If you can’t trade at least 2-lots, don’t trade at all; especially in spreads, it does not make sense to trade a 1-lot. Trade management requires the flexibility that a 1-lot can never offer, and in the long term it will work against you.... to be continued!
Back by popular demand: Get trained to trade Options!JOE ROSS PUTS AN END TO COMPLICATED OPTION STRATEGIES & GREEK TERMINOLOGY
Joe makes trading options simple — more simple than you can imagine.
There are lots of books about options, but you can learn only so much from a book — and then it is time for some mentoring, some practical training on how to put into practice what you’ve read in books. Our options online seminar takes you beyond what you can learn from a book.
Options Trading Online Seminar I
- for Beginning and Intermediate Option Traders -
with Joe Ross
You will get an inside look at the reality of option trading under the guidance of a professional who trades and earns his money in the markets.
You will learn five different ways of finding option trades that have the potential for B I G PROFITS.
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:
Join the chats in September:
Wednesday, September 03, 2008
Wednesday, September 17, 2008
Wednesday, September 24, 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
Join the chats in September:
Wednesday, September 03, 2008
Wednesday, September 17, 2008
Wednesday, September 24, 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: Traders Money Club™, 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!