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Spread Scan Issue: November 26, 2008 - Volume 222
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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
- Get personally trained by Joe Ross - schedule your private session with Joe today!
- Next Joe Ross Live Chats for Traders: Wednesday, November 26, 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 LHZ8 – LHG9: long December '08 Lean Hogs and short February '09 Lean Hogs (Globex)
Today we consider a Lean Hogs calendar spread (Globex): long December '08 Lean Hogs and short February '09 Lean Hogs (LHZ8 – LHG9). The spread has been trading in a range since July (range between -8.0 and -5.0), trading once again at the lower side of the range and giving us the chance of an entry. I personally would try entering via a limit order on weakness. Otherwise there is not much room to take profits in case the spread cannot break out of the upper range at around -5.0.
Traders may want to enter the spread at -7.7 limit. Initial margin is $1,215 (reduced). Suggested risk is $600. Initial projected objective is $600, then a move to -4.0 or higher. Basis is seasonal (11/10 – 12/12) and a trading range.
On November 9 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider entering an interest rates spread (ECBOT) USZ8 – FVZ8 at a close above 1^05.5. Initial margin is $5940 (not reduced). Suggested risk is $2,300. Initial projected objective is $2,300, then a move to 7^00 or higher. Basis is seasonal (11/6 – 12/4) and a 1-2-3 low."
Here's how we suggested managing this trade:
11/10 Suggest entering tomorrow at the open.
11/11 In at around 2^05. Suggested stop at 0^15.
11/19 It was possible to cash in the first lot at around 4^02 (see email from today). Suggested stop at 2 05.
11/20 I recommended (today's email at 9.55 AM CT) to take the money from the table. The spread was trading around 7^05.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, what does “optimized” entry or exit mean? Is it part of spread trading only, or is it also used in outright futures trading?"Andy: Optimized entry or exit is part of seasonal patterns. For example: the spread X–Y shows a strong seasonal up move in July, with an optimized entry date on July 3 and an optimized exit date on July 28. This means “usually” the spread moves up between July 3 and July 28, but this is just based on statistical data of the past and does not give any guarantee about the future. A lot of statistical analysis is involved in seasonal trading. Think of a bell curve used in statistical analysis of distribution. The optimized date point lies at the top of such a curve, and is probably not the best in any one year, but best if used overall. Such a statistical sample usually uses 15 years to calculate seasonality, but, as you can imagine, the optimized entry or exit date cannot fit each single year. That’s why we cannot look only at seasonal patterns. We also have to look at the chart, or use any other tool to optimize our own entry. Seasonality gives you an edge, especially in spread trading. Combined with good money management, you should come out a winner.
The perfect Training for today's Traders with Joe RossJoe Ross offers you a sincere and devoted commitment to teaching and showing you the truth and simplicity in trading.
Private training sessions, for traders at any level, pull together all the information from Joe's books and web courses to make your trading approaches more individualized and usable. These sessions go beyond anything you have seen or heard before; material that is simply not covered in futures, stock, or forex trading books or other sources commonly available to traders today.
Schedule your private tutoring time with Joe Ross.
The tutoring can be in person or online.For instance, do you know of anyone who teaches you about how the market movers really work, what truly takes place in the markets, and how to neutralize the market movers' advantage?
The sessions with Joe are highly individualized. Not only do you learn the important basics, but all of it is focused towards YOUR NEEDS. You will never go away empty-handed (or empty-headed) from a Joe Ross training session.
The objective of the one-on-one session is to give you the information you need, and for you to learn to "get paid to trade" as Joe always advocates. Please follow this link now to learn more about private tutoring with the master trader himself...
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November 26, 2008
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Next Chats for January 2009:
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Wednesday, January 14, 2009
Wednesday, January 21, 2009
Wednesday, January 28, 2009
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Next
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Wednesday,
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Next
Chats for December:
Wednesday, December 03, 2008
Wednesday, December 10, 2008
Next Chats for January 2009:
Wednesday, January 07, 2009
Wednesday, January 14, 2009
Wednesday, January 21, 2009
Wednesday, January 28, 2009
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Here is where you login to Joe's Euro Chat
You can also view our saved weekly Chat Logs in case
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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 (now including Antarctica) is huge. As one student, a successful trader, wrote: "Thanks again for your trust and patience...Joe is a fountain of knowledge...but it is his wisdom that really sets him apart." 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) , Traders Money Club™ 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,
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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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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!