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Spread Scan Issue: October 28, 2009 - Volume 270
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 LCG0 – LCZ9: long February 2010 Live Cattle and short December 2009 Live Cattle (Globex).
Today we consider entering a Live Cattle calendar spread: long February 2010 Live Cattle and short December 2009 Live Cattle (LCG0 – LCZ9). The spread has been trading in an uptrend channel since July. Traders who are looking for a low risk entry might want to enter the spread at the current level. As long as the spread stays above the lower channel line, seasonality (09/14 – 11/08) might help in moving the spread back to the upper side of the channel or even higher.
On October 15 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Cocoa calendar spread: long May and short July Cocoa (CCK0 – CCN0) at a close above -1. Suggested risk is $100; suggested first target at 9, then higher. Basis is seasonal (10/24 – 12/7) and a 1-2-3 low."
Here's how we suggested managing this trade:
10/16 Suggest entering at 0 or better on Monday.
10/19 In at 0 or even better. Suggested mental stop on close at -8; suggested first target at 9.
10/22 Suggested mental stop on close at -4.
10/23 It was possible to cash in the first lot at 9.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
Looking at Fundamentals
by Andy JordanMany traders favor technical analysis over fundamentals for a number of reasons. For starters, fundamental traders tend to be commercial firms; that is, they are involved in the actual production or consumption of a commodity. Because of this, they have intimate, day-to-day knowledge of supply and demand. The commercial firms have information that most of us cannot afford to acquire. For example, are you able to check global soil conditions in an agricultural commodity you wish to trade? Can you check crop conditions? Commercial firms can and do check such things. They also check long-range weather forecasts, crop yield forecasts, and existing inventories.
Commercials have the best fundamental information on a market. You and I have a harder time getting pertinent fundamental information, especially in markets that are more thinly traded. Fundamental analysis generally requires a longer term trading horizon. Fundamentals tend to change more slowly than do technical conditions.
Technical traders tend to be almost everyone except the commercials, such as commodity pools, funds, and retail speculators. Speculators tend to trade in shorter time frames, and technical analysis may better serve shorter term traders. It's unlikely that fundamental analysis will tell you where beans may be next week, but technical analysis may do so.
The widespread use of technical analysis raises an interesting question - does technical analysis work because it actually helps interpret the markets, or does it work because it is widely followed, and thus creates self-fulfilling prophecies for the markets? Whichever it is, I don't care, as long as it works!
How to avoid being a victim of stop-running,
the enemy of most traders:Spread Trading by the Book
Joe Ross' manual Trading Spreads and Seasonals is a self-contained training course designed to get you to an intermediate level of spread trading. Joe brings you down-to-earth with his vast knowledge of one of the most fundamental ways anyone can ever learn to trade.
You will find a way to avoid being a victim of stop-running,
that nasty enemy of most traders.
- Is it really possible to find trades that win 80% of the time, or more?
- Is it possible to get fantastic leverage in the use your money?
- Is it possible to never have to worry about being stopped out?
Yes it is! So keep reading...
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? Spread trading can be incredibly powerful, profitable, consistent, and easy to implement. For more information on Joe's manual "Trading Spreads and Seasonals," please follow this link...
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 October 2009
Wednesday, October 28, 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
Next Euro Chats for October 2009
Wednesday, October 28, 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:
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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Joe Ross has been trading the markets, virtually all of them, beginning well over fifty years ago. He is now in his seventies, enjoying sharing his experiences of many years through his books, seminars, individual tutoring, and newsletters.
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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!