Edition 301 Wednesday, June 2, 2010
Edition 301 Wednesday, June 2, 2010 |
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Commentary by Andy Jordan
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Weekly Spread Scan ExampleThis week we look at 625*BPU0 – 1250*JYU0: long September 2010 British Pound and short September 2010 Japanese Yen Today we consider an inter-market equity spread in the currencies: long September 2010 British Pound and short September 2010 Japanese Yen (625*BPU0 – 1250*JYU0). Ignoring the crazy moves at the beginning of May, the spread has been in a steady downtrend since 05/03. After falling below its March low of about $47,700 for a few days, the spread has moved up in the last few days, giving us a 1-2-3 low for a possible entry. The spread shows a strong but short seasonal move from 06/08 until 06/16. A risk of about $2,000 or even $3,000 for this spread seem to be adequate, due to the high volatility in today’s currency markets. Please note: because of the different values of each unit move of the British Pound and the Japanese Yen, we have to multiply the buy side by 625 and the sell side by 1,250 to get the right equity chart. The spread is 1:1. |
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On May 25 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering an inter-market spread: long July Soybeans and short July Wheat at a close above 475. Suggested risk is $1,000; anticipated target at 520. Basis is seasonal (5/25 – 6/7). Comment: Inter-market spreads can move fast. That’s why I am recommending such a high risk. "
Here's how we suggested managing this trade:
05/26 Suggest entering the spread not higher then 480.
05/27 In at approx. 478; suggest exiting on a close below 466 or intraday at 458.
Visit our Spread Website for more information about our daily newsletter, Traders Notebook.
© 2010 by Trading Educators, Inc. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc
Student's Question: "Andy, how long does it take to become a successful trader?"
Andy: This is a really tough question. Because I don't know what "successful" means to you, we should divide traders into different groups. I think most traders can be found in one of the following groups:
Group One - these are mainly traders new to the trading business. They have read a book or two and they find trading very interesting, but they still don't know where to start.
Group Two - these are the traders who already know what is important in trading. They know it is important to have a trading plan and they know almost everything about the markets. But their lack of discipline and other important skills is keeping them from making money. They still lose money most of the time, and they keep searching for the right entry or method instead of looking in the right place - self-discipline.
Group Three - these traders are trading break-even or are making some money, but still are not able to make "a lot" with their trading. They have a good trading plan which they follow most of the time, but there is still something missing, preventing them from consistently making money in the markets.
Group Four - these traders are consistently making money in the market. They are able to find good trading opportunities, and they are following their trading plan in a very disciplined way. They feel comfortable with what they are doing, and they are not worried when their equity curve goes down from time to time because they trust in what they do.
Group Five - these are the "high class traders" making consistent profits but, in addition to the earnings of group number four, they occasionally make "tons" of money with some of the trades they push to the limits.
Statistics tell us that we have around 75% in groups one and two, only 25% are trading breakeven or better (in day trading the numbers are even worse). Probably 10% of all traders are in group four, and only 2% in group five.
Now it depends on what "successful" means to you. For most beginning traders, being successful means they are not losing anymore. It usually takes a few years for a trader to get into group three. I think it takes that long not because it is very difficult in the beginning, I think it takes that long because most beginning traders don't have the right orientation and they spend lots of time searching for the magic of a Holy Grail.
Once in group three, it again takes some time to move up to the next level. It requires lots of practice for each trader to find his best personal way of trading. I don't know if it is possible to tell how long it would take to get into group four, and many traders will never make it. But to be honest, I think this isn't important - it's your consistency and determination that counts. Making it up to group four is all a good trader will ever need.
Coming back to the question of how long it will take, this depends pretty much on how much time you lose in the beginning. You should try to get a good mentor, one who knows what is going on and who is able to show you the right way. Then work hard on yourself, and you will see you'll get there even faster then you thought!
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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.
Be sure to "white list" us to 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 inform you about additional educational services and products to help you grow as a successful and profitable trader.
Educator for Spread & Swing 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 preference. 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 Jordan was born 1965 in Germany, but is currently living in the Caribbean. He has studied mathematics and business administration in Regensburg and Hagen, and holds a PhD in mathematics.
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™, and has set new standards for low-risk trading with his concepts of "The Law of Charts™ " and the "Traders Trick Entry™." 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 trading approach.
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 tutoring student, a successful trader, wrote: "You have no idea how much improvement in my life and in my trading efforts have those three days with you brought to me."
Joe Ross, the CEO of Trading Educators, 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 the primary author and Editor-in-Chief of the company's newsletters: Chart Scan™, Spread Scan™, Options Scan™, and Traders Notebook™. 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"
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TRADING STOCK OPTIONS
www.options-trading-education.net
Option trading education will open your eyes to how to trade options profitably. You will discover how to trade options and stocks independently, not by using a mechanical method that works in only one type of market.
Understanding how to trade stock options is Jim Augustine’s forte. Not only is Jim a superb trader, he is an excellent coach and trainer.
Keep reading about options trading education to find out!
As with all trading, we believe options trading education should be simple, not complicated. Trade what you see, and believe what you see. Trading options or, for that matter, trading stocks, futures, forex, or anything else, does not require complicated mechanical systems or rigid methods.
If you really want to successfully trade stock options, then you have come to the right place. You will be learning from two of the best option trading professionals, with decades of trading experience behind them.
SIMPLICITY + THE CORRECT ACTION = PROFITS
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LET JOE ROSS OPEN YOUR EYES, AND LET HIM GUIDE YOU INTO SUCCEEDING AS A TRADER IN TODAY'S MARKETS
It has always amazed us that normally astute professional individuals and business people will embark on a course as serious as trading — without seeking professional help.
Thousands who enter the field of trading try to figure it out for themselves, and they end up losing far more money through trading from ignorance than they would have spent for our training. People spend thousands of hours and dollars in a vain attempt to go it on their own.
No one is beyond the need for professional help when it comes to futures trading. Even professional traders come to Joe for help and additional training. Here is what Joe's Private Tutoring students say about the training:
"Fantastic knowledge! Joe showed me simple, easy ways to understand and trade the market. l learned how it works and how to take advantage of it. Now when I look at the chart I can actually understand what l see. Sometimes simplicity is hardest thing to achieve. Joe certainly did it. Make a good investment and learn from the master. For me it was worth every penny." -- Bogdan Podkulski - USA / NJ
"I was having trouble hesitating on my entry into a new position. I knew I needed some help as I was adding more and more indicators to persuade my thought process I was making the correct decision. The more indicators I added the more hesitation I experienced. My trading methodology was somewhat similar to the Ross Hook method. After working with Joe for less than 1 hour I saw how all these indicators had just caused more confusion. I got rid of the indicators and followed the methods I learned from Joe and my hesitation is gone. I now use the Joe Ross trading methods. My first trade using my new methods returned 10% of the capital risked in less than a day. I took the profit and never looked back."
--
Jim A., USA
"Thank you Joe. This was a life changing experience for me in a lot of ways. I've been trading a long time but was stuck and gradually bleeding to death. You've turned that around for me. As well as being able to trade your stuff I'm able to apply it to what I do and it makes all the difference in the world. You're the first teacher in a long career as a trader who has been worth every penny. I'd recommend you to anyone who wants help, from a new trader to any experience level. Plus, the sheer entertainment value of being with you is worth the price of admission. I value your friendship and am very greatful for your help with my trading and my life."
-- Bob Rose, USA / FL
"My trading has improved dramatically since I had my private training with Joe. All aspects necessary to become a successful trader were covered in detail: entry techniques, trade management, and money management. Joe has shown me how to take high probability trades with limited risk, which has made my trading much more profitable and enjoyable." -- William Hove, WI, U.S.A.
"I decided to go to a private tutoring with Joe because I knew that if I didnt get help with my trading that I would end up broke and discouraged like the army of other novice traders that went before me. Joe Ross taught me set ups that are amazing! Thanks Joe."
-- Dan Bray, USA
Reserve your training session fast! Joe's teaching time is limited!
Don't hesitate too long if you want to be taught by a professional and successful long-time trader. Joe reserves only a certain number of days each month for personal teaching time, and the openings on his calendar for private teaching are booked fast, so you need to plan well in advance.
Follow this link to visit Joe's website at Trading Educators to find out more about the private tutoring and to schedule your own training with him, in person or online.
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