Joe Ross' Spread Scan Newsletter

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Spread Scan Issue: September 17, 2008 - Volume 212

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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's Spread Trading Example
Previous Trades
Andy Jordan's Trading Bites
READ THIS: Joe Ross will bring your Trading to Life - find out how...
Next Joe Ross Live Chats for Traders: Wednesday, September 17, 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 SFZ8 – JYZ8: long December '08 Swiss Franc and short December '08 Japanese Yen

Today we consider an inter market spread in the currencies (Globex): long December '08 Swiss Franc and short December '08 Japanese Yen (SFZ8 – JYZ8). The spread dropped over $12,500 since its high in July this year. Can seasonality help this spread to recover from its September low, or will this spread move even lower?

Traders may want to enter the spread at a value of -4.75 stop on close. Initial margin is $1,580 (reduced). Suggested risk is $2,500. Initial projected objective is $2,500, then higher. Basis is seasonal (9/18 – 10/2) and a 1-2-3 low.

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Previous Trades:

On August 5 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering a Sugar #11 calendar spread SBK9 – SBH9 at 0.06 limit. Initial margin is $280 (reduced). Suggested risk is $224. Initial projected objective is $224, then a move to 0.60 or higher. Basis is seasonal (8/4 – 9/23) and a small 1-2-3 low. Comment: The 1-2-3 low is not very exciting, more the fact it happened at break even."

Here's how we suggested managing this trade:

08/11 Suggested stop on close at -0.04.
08/15 Suggested stop on close at -0.01.
08/19 Suggested stop on close at 0.00.
08/26 Suggested stop on close at 0.02.
08/27 Suggested stop on close at 0.03.
08/28 Suggested stop on close at 0.08.
08/29 Suggested stop on close at 0.13.
09/02 Suggested stop on close at 0.15.
09/04 Suggested stop on close at 0.16.
09/11 Suggested stop on close at 0.23.

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

Andy Jordan's Trading Bites

10 Spread Trading Tips

(Please go back to the last issue to read further Tips!)

6) Be selective
Especially if you start with a small amount of capital, try to choose spreads:
a) with a high percentage of historical success
b) with a favorable seasonal tendency
c) with a smaller protective exit point
d) traded on the Chicago (or Kansas City) exchanges; NY markets can be tricky

7) Know which spreads are really spreads
You can buy Pork Bellies and sell Japanese Yen at the market and at the same time; you can even plot it on a chart, but that doesn’t mean that it’s a recognized spread. Recognized spreads are listed by each exchange, and they are the only spreads offering a margin discount. There are also other spreads that will work well seasonally even though yhey are not officially recognized spreads. It’s important to know which they are, not only because you will enjoy a discounted margin, but also because it will be executed as a spread at a more favorable price (you will often get only one slippage instead of getting slippage on 2 executions). To give you an example: soybeans vs. corn is not a recognized spread per se (only as a ratio 5:2) even though they are both grains and both have the same tick value. You can certainly trade this spread, but if you are not planning to enter it with a limit order (ex. Buy 3 SX Sell 3 CZ at 315 on the buy side) you are better off giving 2 separate market orders, or the broker will have to execute the orders at 2 different times (in 2 different pits) possibly incurring additional slippage.

... to be continued!

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READ THIS: Joe Ross will bring your Trading to Life - read on and find out how...

FIRST: Take a deep breath and then...

...take a look at this book:

Now let us warn you first: This is a nasty book.

Why? Because it will take you apart at the seams, point out your weaknesses as a trader, and then attempt to revive 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, and ignore this.

So what will YOU do?

Trading is not the problem for most of the participants in the market. Most traders know how to trade, BUT they don't have the right mindset and approach for trading the markets. 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. Where do they go wrong? Joe Ross will answer this and many more questions, plus, in Trading Is a Business, he shows how YOU can become a successful trader. He shows you how to properly manage your trades and yourself.

Trading will become much easier, more pleasant, and more relaxed. Why? Because you will understand the markets and what is really going on. Follow this link to our tradingeducators website for more information about this CLASSIC: "Trading Is a Business."

View last week's Spread Scan # 211 from September 10, 2008

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 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 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 & Andy Jordan

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.

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.

There is no “one” way to trade correctly. Trading is as individual in its nature as anything in this world can be. The only thing that is right is what works for you.

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.

You can follow this link to our forum now!

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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!