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Spread Scan Issue: November 18, 2009 - Volume 273
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 100*SMF0 – 600*BOF0: long January 2010 Soybean Meal and short January 2010 Soybean Oi
Today we consider entering an inter market equity spread in the Soybean Complex: long January 2010 Soybean Meal and short January 2010 Soybean Oil (100*SMF0 – 600*BOF0). The spread has been trading in a wide range between $5,500 and $8,500 since May 2009. In November the spread made a new low at $4,876, and is now testing to get back into the range. Will the spread stay in the range after it penetrates $5,800, and will it move even higher to test the upper side of the range again? The November low at $4,876 seems to be a logical level for the initial stop. Please note: Because of the different values of each unit move of the Soybean Meal and the Soybean Oil, we have to multiply the buy side by 100 and the sell side by 600 to get the right equity chart. The spread is 1:1.
On October 13 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Cocoa calendar spread: long March and short May Cocoa (CCH0 - CCK0) at -10 or better. Suggested risk is $120; suggested first target at 0, then higher. Basis is seasonal (10/14 – 12/13) and a 1-2-3 low. Comment: the 1-2-3 low happened already end of September – beginning of October."
Here's how we suggested managing this trade:
10/14 In at -10 or better. Suggested mental stop on close at -18.
10/21 Suggest exiting on a close below -2.
10/22 Suggest exiting on a close below -15.
10/26 Suggest cashing in the first lot at -6. The spread is having a hard time breaking out of its range.
11/02 It was possible to cash in the first lot at -6. Suggest exiting on a close below -15.
11/03 Spread isn’t going anywhere. Suggest exiting tomorrow or on Friday.
11/06 The fast ones already got out at break even, others at 13. Out on average at 11.5 with a little profit on the entire trade.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
Trading System
You will need a system or plan if you want to succeed in trading. The usual way of attaining such a system is many days of trading, hard-earned personal experience, analyzing trades you’ve made to learn from your mistakes, a knowledge of probability, observing other traders, trade simulation, book learning, seminars and mentoring, or any number of similar factors. Such a system will give you a correct mathematical and intuitive grasp, and once this hard-won system is in place, you should deviate from it only on rare occasions and for good reasons. Once you attain this system, it can operate almost by itself – you just do it, quite simply – almost naturally – without thought of opponents or outcome.
If you don’t have a system yet, or or feel unsure about the one you have, my mentoring program can help to find the right system for you so that you can trade without hesitation or fear.
CHART YOUR LIFE AND MAKE MONEY DOING IT
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Experience a more rewarding trading life by becoming a more profitable trader, as well as becoming a more successful all-round person who achieves balance and control in many aspects of your life.
Monitor your daily life to chart your progress, and to stay on course with your trading plan.
Master Trader Joe Ross credits the Life Index for Traders for his ability to master self-discipline, and for his growth as a more profitable trader.
FRESH PERSPECTIVES - Ready for YOUR active participation.
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Next U.S. Chats for November 2009
Wednesday, November 25, 2009
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Next Euro Chats for November 2009
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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,
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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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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 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!