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Spread Scan Issue: May 20, 2009 - Volume 247
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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
- Your Future in Trading begins here - find out more!
- Next Joe Ross Live Chats for Traders: Wednesday, May 20, 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 CLZ9 – CLQ9: long December '09 Crude Oil and short August '09 Crude Oil (NYMEX)
Today we consider a Crude Oil calendar spread (NYMEX): long December '09 Crude Oil and short August '09 Crude Oil (CLZ9 – CLQ9). After shooting up in March from 1.73 to 4.0, the spread traded mainly sideways in April. In May the spread dropped almost 50% from its April high (measured from the low in March). Will the spread turn around and move back up again following its seasonality (05/17 – 06/05)?
Traders may want to enter the spread at a close above 3.22. Please ask your broker about the margin. Suggested risk is $600. Initial projected objective is $600, then a move higher.
On April 15 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a currency equity spread 1000*CDM9 – 625*BPM9 (Globex) 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!"
Here's how we suggested managing this trade:
04/16 More aggressive traders might want to enter tomorrow at -$10,600 or better with a close mental stop at -$11,500.
04/21 Spread is moving down and might give us the opportunity to enter at a lower level. Let’s see if it moves down into the range shown on the chart below.
04/22 Aggressive traders are in this trade at -$10,600 or better. Suggested mental stop at -$11,900.
04/27 The spread moved up to the first suggested target ($2,000) during the morning hours. Suggested mental stop at -$10,600.
05/04 Suggested mental stop at -$9,600.
05/06 Suggested mental stop at -$9,200.
05/12 Spread hit suggested stop. Suggest exiting MOO, if not already out.
05/13 Out at approx. -$8,650.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
Time and Money Management
by Joe RossYou pay a price for every profit you take, with time and effort required to obtain it, not to mention the years of experience upon which your knowledge and system methodology have been constructed. The slippage, and getting knocked out of a winning trade by one tick, have a cumulative mental attrition that can be offset only by constant profits, vacations, and other interests not market related. Time is the most valuable commodity in every person's life, because each person knows he only has so much of it. To use time wisely creates more of it. To use money wisely creates more of it. It is ironic that man is the only animal that knows he is going to die, and the only animal that laughs. There is probably some profound message related to trading in this irony.
One of the most frustrating things in trading is knowing what to do, how to do it, when to do it, and not being able to execute. This is why it is so important to have a decent broker with good executions even if you have to pay a little more to obtain it. A bad fill hurts you a lot more than a higher commission. If you get slipped a tick in and a tick out, you will have paid a lot more than, perhaps, a $25 commission. But the most frustrating thing is not being able to get the job done when you know how to do it. This has been a plague on trading from before I began to trade. It is always a problem to a greater or lesser extent.
Your Future in Trading begins HERE
Joe's Futures Trading E-book Course for Beginning and
Intermediate Traders
Find your way through the vast Labyrinth of
There is much information available nowadays on how to trade Futures; numerous books have been written and many websites designed to provide educational services for beginning traders who look for the right KNOW-HOW of trading.
Trading Knowledge - get the MOST IMPORTANT facts NOW
But why waste time and money buying numerous resources when you can get a complete course - all in one place?Joe Ross offers YOU a valuable TRADING STUDY COURSE - START OUT SUCCESSFUL FROM THE BEGINNING...
The Course is fully up to date for today's markets and has information for traders at all levels, from beginners all the way through to advanced.
In "From the Beginning" you will find the answers all in one place. Whether you've been trading for years or are just a beginner, there is much basic detailed information about this business that most traders do not know, and are unaware that they need to know.
The course will give you the facts you need to make important decisions. Let us tell you more about this important course on our website...
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 20, 2009
Wednesday, May 27, 2009
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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 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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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
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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!