Edition 322 Wednesday, October 27, 2010
Edition 322 Wednesday, October 27, 2010 |
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Commentary by Andy Jordan
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Weekly Spread Scan ExampleThis week we look at USZ0 – TYZ0: long December 2010 30Yr T-Bonds and short December 2010 10Yr T-Notes Today we consider an inter-market interest rates spread: long December 2010 30Yr T-Bonds and short December 2010 10Yr T-Notes (USZ0 – TYZ0). The spread has been in a long term up trend since April 2010. After moving up nicely in August, the spread retraced to the July highs, and is now giving us a 1-2-3 low for an entry. Even though the spread has been nicely following its 15 year seasonal pattern (10/15 - 11/19), the spread is still high risk (I am recommending about $1,500 per spread) due to its high volatility. The October low at 4'25 might be a possible level for the initial stop. |
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On September 26 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Lean Hogs calendar spread: long February and short December Lean Hogs at 2.9 limit on Monday (if not filled suggest entering MOC on Monday). Suggested risk per lot is $600; initial projected objective is $630, then higher. Basis is seasonal (9/27 – 11/10). Comment: The entry recommendation for Monday is based on the consistent up trend and seasonal statistics. The spread has been making profits ($870 on average) in 15 out of the last 15 years, with decent draw downs in almost all years. If you don’t like the idea of entering the spread this way, you might want to wait until the spread makes a new high above 3.65."
Here's how we suggested managing this trade:
09/27 In at approx. 3.2; suggest exiting the spread at a close below 2.0.
10/12 It was possible to cash in the first lot at 4.2 (see email); suggest exiting the spread at a close below 2.8.
10/13 Suggest exiting the spread at a close below 3.2.
10/14 Suggest exiting the spread at a close below 3.4.
10/22 Suggest exiting the spread at a close below 4.4.
10/25 Suggest exiting the spread at a close below 4.7.
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© 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
How to approach trading - Manage the Trade
Once you get into a trade, you must eventually get out. Some argue that this is more important than where you get into a trade. My experience has been that any fool can get into the market, but it takes a successful trader to consistently get out with a win. As I follow the markets, I find there are four reasons to get out of a trade:
To manage the first condition, a market moving back against my position, I find it is a good idea to use a stop order. In fact, I would say trading without a stop is like walking a tight rope without a net! You should always place a stop, not because you expect the market to go against you, but to protect against the unexpected. The worst losses I've seen have resulted from a trader's not having a stop order in place and the ensuing deer-in-the-headlights paralysis that sets in once losses start to mount.
If you are fortunate enough to get into a market that moves in the direction of your trade, it is also important to move your stop with the market to eventually protect some profits. In that case, you are getting out when prices hit your trailing stop.
To manage the second condition, where the market stalls for a time, I use a time stop. All my plans call for the use of a time stop. A money, points, percentage, or number of ticks or pips stop is a money management stop. A time stop is a trade management stop. I am a momentum trader whether I am scalping, trading a swing, or trading the trend. I am looking to make my money from price movement. If I am wrong about movement, then I am just as wrong as if I were wrong about direction. My timing is not right if the market does not move. So I get out.
To manage the third condition takes great discipline. I have to learn to be satisfied with what I can get a very high percentage of the time. That is always my first objective. I want to be paid to trade. I want at the very least to have had a free trade. Therefore, I trade with at least one fixed objective (money management) and a trailing stop (trade management) in addition to a time stop.
To manage the fourth condition I have learned to go with my feelings. If I become uncomfortable beyond what is normal for me, I allow my instincts for flight to take over and I get out — as quickly as possible. I am not out to prove to anyone how much pain I can withstand. Trading in pain has always caused me to make serious mistakes. I prefer to make the mistake of losing out on what may turn out to have been a winning trade. Thankfully, my instincts have turned out to be right far more times than they’ve been wrong. I’m usually glad I got out of an uncomfortable trade when I did.
Essential for your futures trading education
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This was the first trading manual Joe Ross wrote. It contains 376 pages of explicit information about commodity futures trading. Included are discussions of how to recognize congestion, how to set and trail stops, how to get in step with a market, how to select trades, and how to conduct your trading as a business. It is in this book that master trader Joe Ross first revealed his trading envelope. He reveals exactly how to define a trading range, as well as how to trade the breakout of a trading range — and so much more... |
DAY TRADING FOREX
Trading forex is heavily marketed and popular, but it is also deadly. The e-mails and letters we receive attest to the fact that most people who attempt to day trade forex are losing their money. The turnover rate is atrocious. Because of the pain Joe Ross has seen, he decided to teach you how he day trades the currency pairs.
Joe Ross has written an e-book entitled “Day Trading Forex.”
Joe says: "This is not a manual for raw beginners. My purpose here is to teach you how to trade forex without getting yourself into a mess of trouble. In this manual, you will find the essential understanding of how prices move and how to trade the various situations that you see on the price chart that is live and moving right before your eyes."
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Joe shows you the trips and traps of forex day trading that you need to know in order to avoid the fate of so many other traders. If you want greater safety in your trading, Joe shows you where to find it. He tells you about where the greatest forex profits are made. There is much more Joe Ross shares with you in the pages of “Day Trading Forex” - follow this link to our website to find out more. |
If you wish to review Spread Scans from the past 3 months,
please follow any of the following links to its weekly issue:
August 2010 |
September 2010 |
October 2010 |
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NEXT LIVE CHAT SESSIONS WITH JOE ROSS:
Wednesday, October 27, 2010
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NEXT EURO CHAT SESSION WITH JOE ROSS:
Wednesday, October 27, 2010
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We created our Trading Community Forum for the purpose of providing positive, uplifting educational material to traders who want to participate. There is much to be gained from the collective wisdom and experiences of those who choose to participate. Let's share what we have learned that has been helpful. Let's all push forward to exchange new ideas and interesting concepts. |
There is no "one" way to trade correctly. Trading is as individual in its nature as anything in this world can be. The only thing that is right is what works for you.
If
you are willing to share what works for you, then we welcome you.
Your ideas may help someone else on his/her way to success. In turn,
you may pick up an idea or piece of information that will help you
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Joe Ross has been trading the markets, virtually all of them, beginning
over five decades ago. He is now in his seventh decade
of life, so he has the experiences of many years that he is willing
to share, as he is already doing through his books, seminars and newsletters.
We hope you decide to join us in our forum to make your contributions
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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"
Joe sets forth the mission of Trading Educators as follows:
For information about Joe Ross and Trading Educators, please follow this link...
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Copyright 2010. Published by Trading Educators, Inc.
Spread Scan is a complimentary educational letter.
The information contained in this educational letter has been carefully gathered from sources believed to be reliable, but accuracy cannot be guaranteed. Readers should not assume that anything written here is to be considered as a recommendation, or that any performances shown will equal performances of the past.
This educational letter is intended solely for purposes of information and does not purport to provide legal, tax, or individual investment or business advice.
Readers should consult with expert legal, tax, business, and financial counsel before considering any action on the information contained in this newsletter. The publisher and its associates, editors or employees may have taken positions in and may from time to time make purchases or sales within markets and market vehicles mentioned herein. Reproductions of this newsletter are prohibited except by permission.
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What would it be like to discover trades that trend and trend, and then trend some more?
The best traders find ways of trading the markets that enable them to get in and out with the greatest probability of profits — repeatedly. That takes experience, usually years and years of it, watching and participating in the markets day in and day out — a very expensive education in more ways than one.
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 to discover trades that trend, and continue to trend. You'll find out in Joe Ross' "Trading Spreads and Seasonals" manual. Follow this link to find out more...
LET JOE ROSS OPEN YOUR EYES AND 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.
The current markets have changed radically this year. Are you in current step with them? Joe will bring you up-to-date!
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."
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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.
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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