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Spread Scan Issue: May 6, 2009 - Volume 245
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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
- Secrets many full-time traders use on a daily basis to exploit the markets - find out what they are
- Next Joe Ross Live Chats for Traders: Wednesday, May 6, 2009
- 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.
This week we look at CH0 – CN9: long March '10 Corn and short July '09 Corn (ECBOT)
Today we consider a Corn calendar spread (ECBOT): long March '10 Corn and short July '09 Corn (CH0 – CN9). After topping out at almost 40 in November '08, the spread declined until March '09. Since then, the spread has been trading sideways with a possible resistance around 30. Can seasonality (03/11 – 06/05) help to move the spread higher? The March low at 29 ¾ seems to be a logical place for the initial stop.
Traders may want to enter the spread at 32 limit. Initial margin is $270 (reduced). Suggested risk is $200. Initial projected objective is $200, then a move to 40 or higher. Basis is seasonal (3/11 – 6/5) and a possible resistance around 30.
On April 13 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Bean Oil calendar spread BOZ9 – BON9 (ECBOT) at 0.80 limit. Initial margin is $203 (reduced). Suggested risk is $100; initial projected objective is $100, then a move higher. Basis is seasonal (4/29 – 6/29). Comment: It looks like the spread could stabilize around 0.75 and is now ready to start its seasonal move. Because of the low risk, this spread is mainly for those with a small account."
Here's how we suggested managing this trade:
04/14 It was possible to get in at 0.80. Suggested mental stop at 0.66.
04/24 It seems there is resistance around 0.73 and the spread is on its way now.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
Trade Management vs. Trade Entry
In spread or position trading, I am convinced that trading success comes from how you manage the trade rather than your entry strategy. This is the nature of long-term trading. As the time frame of our trades becomes longer, the importance of the entry becomes less.
Just look at the spread trades from Spread Scan. Did the entry matter? In most cases it wouldn’t have been important for the success of the trade if you had taken the entry on the breakout of the hook, at a low of a hook, at the breakout of last week’s high, or any other entry strategy. Most trades have worked out just because of one simple fact: the spreads were moving in the right direction, and your initial stop didn’t get hit!Look again at the successful spread trades of 2009. What else do you think was important? The only important thing was that you stayed in the successful spreads long enough! Please check – are you still in one of the good trades? Did you get out of those spreads because you “thought” it would be time to exit?
Of course, entry does also matter, but not necessarily in the way most people think of it. We need an entry strategy to control ourselves, to tell us when we should get into a trade without jumping in just by gut feelings (gut feelings may work for some, but for most traders they don’t). The entry itself is mainly random in the sense that we just don’t know what will happen in the next few days. Sometimes we are lucky to get in at the right moment, but most of the time we do fine if we can catch a large part of the move independent of the precise entry or exit value.
My suggestion: whenever you are having problems with your trading, check on your trade management. Check if you have precise entry and exit rules, and if your exit rules ensure that you get the most out of your winning trades!
Secrets many full-time traders use on a daily basis to
exploit the markets
There are secrets many full-time traders use on a daily basis to exploit the markets for their own financial gain at the expense of the "little guys" — secrets 97% of all traders don't know about! Whether you're a total novice or a seasoned pro, you can start applying these secrets on your very first day!
The best traders find a way of trading the markets that enables them to get in and get out with the greatest probability of profits — time after time after time. That takes experience, usually years and years of it, watching and playing the markets day in and day out — a very expensive education in more ways than one.
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? You'll find out in Joe Ross' Trading Spreads and Seasonals manual. Follow this link to find out more...
JOE ROSS' SOCIAL NETWORK & BLOG
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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 May 2009:
Wednesday, May 06, 2009
Wednesday, May 13, 2009
Wednesday, May 20, 2009
Wednesday, May 27, 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 May 2009:
Wednesday, May 06, 2009
Wednesday, May 13, 2009
Wednesday, May 20, 2009
Wednesday, May 27, 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.
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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!