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Spread Scan Issue: April 22, 2009 - Volume 243
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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:
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.
This week we look at 1000*CDM9 – 625*BPM9: long June '09 Canadian $ and short June '09 British Pound (Globex)
Today we consider an equity spread in the currencies (Globex): long June '09 Canadian $ and short June '09 British Pound (1000*CDM9 – 625*BPM9). The spread has been trading sideways since January 2009. After testing its January low again in April, the spread has been in a short term uptrend. Can seasonality (04/25 – 05/11) help to move the spread back up to its January high?
Traders may want to enter the spread at a close above -$9,960. Initial margin is $7,040 (fractionalized credits). Suggested risk is $2,000. Initial projected objective is $2,000, then a move higher. Basis is seasonal (4/25 – 5/11) and a 1-2-3 low. Comment: Currency spreads are usually volatile and recommended only for those with deep pockets! Because of the different values of each unit move of the Canadian $ and the British Pound, we have to multiply the buy side by 1000 and the sell side by 625 to get the right equity chart. The spread is 1:1.
On April 16 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider selling the June 30Yr T-Bonds at 126^23 stop market (all sessions). Suggested stop (and reverse) at 127^07; suggested first target at 126^07. Basis is a TTE in front of a RH."
Here's how we suggested managing this trade:
04/17 Short at 126^23; trade hit suggested first target; suggested stop at 125^20; suggested final target at 124^04. The stop might be too close for some traders and you might want to give more room.
04/20 Stopped with the second lot at 125^20.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
DO YOU TRADE STRICTLY BY TECHNICAL ANALYSIS, OR DO YOU STILL TRY TO WATCH THE FUNDAMENTALS AS WELL?
by Joe RossFor years I have differentiated between chart and technical analysis. Please allow me the courtesy of calling what I use as primarily ‘chart’ analysis, secondarily at times, technical analysis, and when I think it is appropriate I throw in a bit of fundamental analysis. It is becoming more and more likely that the fundamental analyst may be destined for a lesser role than in the past. Increasingly, the large traders who once engaged in fundamental analysis are engaging in synthetic transactions based upon financial information. Financial trading today far exceeds commodity trading, and seems to be ever-increasing in that direction. For example, consider that a majority of business relationships are contractually linked to government indices like the Consumer Price Index (CPI). Labor contracts often link wage escalations to the CPI. Social Security payments are linked to the CPI. Commercial Real Estate leases are linked to the CPI. Cost of living increases and a variety of benefit programs often have CPI links. Is it any wonder that so many people hold their breath whenever the Federal Reserve Chairman belches?
However, there is a lot more to it than mere linkage and hot air from the Federal Reserve. The Federal Reserve and the government both fool around with the way the CPI calculation is made. The same is true for most of the major financial reports. It is because there are so many reports from so many bureaus and agencies that it becomes almost impossible to perform fundamental analysis.
If one looks to the government reports on agricultural products, energy reserves, or mining production, it is no better. Producers lie to the government about inventories, intentions, and conditions. The farmer tell the government he intends to plant corn, when all along he really intends to plant soybeans. The rancher lies about his intentions to take his herds to the market. The natural gas companies lie about their ability to bring gas on line. Oil companies lie about their production and their reserves, and so it goes. Since reports are the major factor in most markets today, it is no wonder the markets behave so erratically. No one knows what to believe anymore.
How the News of the World Affect Your Financial Future
As a trader or investor you will greatly benefit from the wealth of information and tips that Joe Ross is providing to the members of the Traders Money Club. Learn how the news of the world can and will affect your financial future and know what to do about it.
Each jam-packed issue will point you to overlooked opportunities in your trading and investing business, and hand you ready-to-trade and incredibly powerful strategies to make your business increasingly profitable. Sign Up Today
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Read what TMC Members have to say about this unique service:
"Joe's art of contrary thinking helps me in making decisions and taking action in a manner opposite the crowd". -- M. Herrlein, Germany “I'm a novice future trader, after attending the day trading web course with Joe, I liked his approach with the markets and I was convinced, after 1 one month free subscription, to subscribe for 1 year in TMC also because I instinctively trusted Joe and I'm sure he'll give us not only useful information but also nice teaching about investment and the markets." -- A. Scaglietta, Italy
"As a trial member, I already know I will be signing on for the long haul. Joe's "Traders Money Club" offers great, unhedged insight and more importantly, specific actionable recommendations on investments, including the experience, knowledge and logic to back it up. Well Done Joe. Thanks for offering this service." --
Tim Appold, USA"Having read a few of Joe's books I would be a fool to ignore this and it has earned me money ...is there a better recommendation? I was sceptical at first as it is sooooo cheap. That said, what I earned on CROX today due to this site surpasses all I have spent on Joe's Books and T-Bond Set Ups and subscriptions to MRCI and Genesisft....many many thanks." -- D. Kerwin, UK “I enjoy reading TMC as I get trading/investment ideas and real time info on financial and economic matters. The content is a lot different than what I would get from the mainstream media.” -- A. Adere, Tanzania
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:
U.S. Live Chats for April 2009:
Wednesday, April 22, 2009
Wednesday, April 29, 2009
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
European Chats for April 2009:
Wednesday, April 22, 2009
Wednesday, April 29, 2009
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 (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,
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. Andy is the founder and president of Jordan Trading, S. A. 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 an online course in spread trading, "Trading Mentoring - 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 our trading
methods, and supervises keeping them up to date.
|
 |
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!