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Spread Scan Issue: August 19, 2009 - Volume 260
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 HOV9 – RBV9: long October '09 Heating Oil and short October '09 RBOB Gasoline (NYBOT)
Today we consider an inter-market spread in the energies (NYBOT): long October '09 Heating Oil and short October '09 RBOB Gasoline (HOV9 – RBV9). The spread dropped down to -5.00 at the end of July, and recovered in only a few days back to its long term range (1.00 – 11.00 from May through July). The seasonal time window is very small (08/14 – 08/23) and the trade quite aggressive. The level around 1.00 might be a logical place for the initial stop.
Traders may want to enter the spread at 4.00 or better. Initial margin is $6.260 (reduced). Suggested risk is $2,500. Initial projected objective is $2,500, then a move higher. Basis is a 1-2-3 low.
On August 3 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider selling the October LC (Globex) at 90.10 stop market (pit session only; no entries on gap openings). Suggested stop at 90.45; suggested first target at 89.75, then 88.75. Basis is a TTE in front of a RH."
Here's how we suggested managing this trade:
08/04 Short at 90.10; trade hit suggested first target at 89.75; suggested stop for the second lot at break even; suggested final target at 88.95.
08/05 Out with the second lot at 88.95.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, is Spread Trading hard to learn?"
Andy: At first Spread Trading seems to be more complicated compared with outright futures trading because you are simultaneously buying and selling two different contacts in the same market (calendar or intra-market spreads) or different but related markets (inter-market spreads). It seems that holding a long and short position at the same time confuses some traders. As soon as they understand they are trading the “difference” (the spread) between the two contracts, it gets much easier. Also, you shouldn’t focus much on the two outrights of the spread (so called “legs”) and rather focus on the spread itself, because that is what you are trading. While trading a spread, you do not really care about the legs involved as long as the “difference” moves in the right direction. As soon as a beginning spread trader understands the basics, he will note that spread trading has many advantages. I will name a few in the upcoming issues of Spread Scan.
“This is by far the most important book for anyone in the trading business to read. It opened my eyes and has allowed me to understand the price mechanics of the markets. Literally, if you master the material in Trading the Ross Hook, you need look no further for information that will provide you with the ability to be a full-time, profitable trader. In my opinion as a successful, profitable trader, it is one of the most important works in the history of trading. Simple and applicable, what more could one ask?”
-- T. Cowie, CanadaJoe Ross, creator of the “Ross Hook™,” has set new standards for low-risk trading with his concept of "The Law of Charts™." The concepts taught and demonstrated in his manual Trading the Ross Hook are applicable in any market and any time frame, and can be used for daytrading or position/swing trading.
In Joe's manual "Trading the Ross Hook", you will learn exactly what Ross Hooks are. You see their origins and what causes them to occur.
Joe shows you step-by-step how to identify them, and how to filter them so that you trade only the best hooks. You see how to manage Ross Hook trades, how to manage risk, and how to manage your money when you trade these very lucrative market formationIn chapter after chapter, and example after example, Joe shows you how his students are successfully trading Ross Hooks using simple studies that can be found in most trading software packages. Then you see how he personally trades Ross Hooks, using chart reading without technical indicators or technical analysis of any kind.
Follow this link to get more detailed information about Trading the Ross Hook..
TESTIMONIALS FROM OTHER TRADERS
"Trading the Ross Hook" is one of the most important trading classics that Master trader Joe Ross has written. It gives very valuable information and very good examples to make one understand what RH's are and how to trade them."
-- C. Aboumrad, Lebanon“This book gives a detailed and accurate method to trade any market and if followed can save much heartache. No fancy mathematical confusion. Just read the pattern and practice seeing the patterns forming. After more than ten years of reading about trading, Joe's method distills the very essence of chart reading for practical application.”
-- J. Potts, Australia"The part I like best about this book is the Vanila Ross Hook and understanding consolidation / congestion and the Ross Hook with Bollinger Band. So many practical advices on trading wisdom that can only come from an experienced trader and educator like Joe Ross. Thanks to Joe Ross. I can now see any trading chart with a more crystal clear eyes and mind."
-- B. Sjahrazad, Indonesia"Highly Recommended Futures Trading Book
"Trading the Ross Hook offers commodity and futures traders an excellent trading strategy and there is no doubt you will get a better understanding of how the markets really work after you read this book. The book is meant to be studied, not casually read and to be put into action without fully comprehending the strategy. The book also gives you some excellent techniques for entering the Ross Hooks early, which I use in my own trading. Joe Ross has written some excellent books on trading commodities and Trading the Ross Hook will likely stand the test of time."
-- Chuck Kowalski, About.com, Commodities Guide
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:
Next U.S. Chats for August, 2009
Wednesday, August 19, 2009
Wednesday, August 26, 2009
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Next Euro Chats for August, 2009
Wednesday, August 19, 2009
Wednesday, August 26, 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!