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Spread Scan Issue: July 1, 2009 - Volume 253
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. Follow this link to view this week's Spread Scan immediately or read on.
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 to "white list" us to ensure that you receive all your issues of Spread Scan. That way you can continue to enjoy learning through the best free educational trading information available, and we can keep you informed about additional trading techniques, educational services and products to help you grow as a successful and profitable spread trader.
This week we look at 1000*CLV9 – 420*HOV9: long October '09 Crude Oil and short October '09 Heating Oi (NYMEX)
Today we consider an inter-market equity spread in the energies (NYMEX): long October '09 Crude Oil and short October '09 Heating Oil (1000*CLV9 – 420*HOV9). The spread has been trading in a trading range between -$9,200 and -$5,500. After testing the March low again in June, the spread seems to be ready to move higher (also, the blue line indicates a break of the short term downtrend). Will seasonality (07/02 – 07/19) help to move this spread higher? Because of the different values of each unit move of the Crude Oil and the Heating Oil, we have to multiply the buy side by 1000 and the sell side by 420 to get the right equity chart. The spread is 1:1.
Traders may want to enter the spread at -$8,000 or better. Initial margin is $4,220 (reduced). Suggested risk is $2,000. Initial projected objective is $2,000, then a move higher. Basis is seasonal (7/2 – 7/19) and a 1-2-3 low. Comment: This spread is recommended only to those with deep pockets!
On June 11 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering an Eurodollars calendar spread EDM0 – EDU9 at a close above -1.135. Please ask your broker about the margin. Suggested risk is $700. Initial projected objective is $700, then a move to -0.40 or higher. Basis is seasonal (5/30 – 7/11) and a possible 1-2-3 low. Comment: the spread is very volatile, that’s why I am recommending such a high risk."
Here's how we suggested managing this trade:
06/12 Suggest entering on Monday at -1.05 or better.
06/15 In at -1.05 or better. Suggested mental stop on close at -1.30.
06/16 Suggested first target at -0.85.
06/23 Spread hit suggested first target. Suggested mental stop on close at -1.12.
06/24 Suggested mental stop on close at -1.10.
06/25 Suggested mental stop on close at -1.06.
06/26 Suggested mental stop on close at -1.00.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, I started day trading about a year ago, but it seems I am not able to make consistent profits. I do well for a month or two, but then I mess up and give back all I made, and most of the time even more. What do you think I should do?"
Andy: When I started trading, the same thing happened to me. I thought day trading was the place where I wanted to be; lots of action and the possibility of making lots of money with a small account. It took me about a year to find out the trading business is not as easy as I initially thought. (I was lucky because I eventually ran into Joe and he taught me about spread trading.)
Getting away from short-term trading and starting with long-term trading was the best I could do in the beginning. For most beginning traders, short-term trading is very hard to do. You need a precise trading plan, otherwise you will fail. You have to function like a trading robot while day trading, and you have to avoid huge losses. Small controlled losses aren’t usually the problem even if you have a losing strike. The big uncontrolled losses are the trader's worst enemy. If you are able to avoid such losses, you are on the right track!
HAVE YOU BEEN MISSING OUT ON ALL THE WONDERFUL, PROFITABLE BENEFITS OF SPREAD TRADING?
YOU DON'T HAVE TO MISS OUT ANY LONGER!Do you know why Spread Trading is hardly mentioned in any book, or on websites, or by exchanges, or by your broker? You need to find out why!
You will be amazed.
Spread trading offers you the most efficient use of your trading capital, more leverage than any other form of trading, and less volatility than any other form of trading! There are a lot more benefits; just read on to see.
Joe Ross' Spread Trading Online Seminar teaches you what you need to know to be able to trade spreads. All you need in order to study Joe's online video seminar about Spreads is a few hours of your time, your computer with internet access, and a valid e-mail address. You can learn from Joe Ross from anywhere in the world - his online Spread Trading Video Seminar allows you to participate even if you are in your pajamas.
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U.S. Live Chats for July 2009:
Wednesday, July 01, 2009
Wednesday, July 08, 2009
Wednesday, July 15, 2009
Wednesday, July 22, 2009
Wednesday, July 29, 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
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European Chats for July 2009:
Wednesday, July 08, 2009
Wednesday, July 15, 2009
Wednesday, July 22, 2009
Wednesday, July 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 1980'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.
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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!