Edition 325 Wednesday, November 17, 2010
Edition 325 Wednesday, November 17, 2010 |
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Commentary by Andy Jordan
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Weekly Spread Scan ExampleThis week we look at RBF1 – HOF1: long January RBOB Gasoline and short January Heating Oil Today we consider an inter-market spread in the energies: long January RBOB Gasoline and short January Heating Oil (RBF1 – HOF1). The spread has been going mainly sideways in a range between -16.00 and -24.00 for the last 5 months. After testing -24.00 again last Wednesday, we might get a 1-2-3 low for a possible entry. The entry into the trade would be triggered on a close of the spread above -21.50, with an initial stop below the November low. A risk of at least $1,500 per spread contract seems necessary due to the high volatility of the spread! |
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On October 28 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering an inter-market meat spread: long June Lean Hogs and short June Live Cattle at -17.00 limit (first lot). Suggested risk is $1,000 per spread (2 lots minimum). Suggested first target at -13.00, then higher. Basis is seasonal (10/25 – 1/28). Comment: Once again I am recommending scaling into a spread. It looks like the spread has found resistance at the current level, but just in case, I am recommending keeping the second lot for later."
Here's how we suggested managing this trade:
10/29 It was possible to enter the spread at -17.00 with the first lot.
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, it seems I am repeating the same mistake again and again. Any suggestion as to what I can do before I lose all my funds?"
Andy: Anyone is allowed to make one mistake. When the mistake is repeated, watch out! The third repetition of the same mistake constitutes self-destructive habitual behaviour that must be reversed. Stop all trading immediately, and thoroughly examine your self-discipline. Once the reason for the repetitive mistake is understood (usually fear, anger, greed, or guilt), it must be corrected before trading may begin again. Some traders lose money because they are atoning for guilt feelings or gifts they feel are undeserved. Such traders should donate funds to their favourite charities, not to other traders!
Any flaw in a trader's character, such as greed, hatred, dishonesty, revenge, arrogance, etc., will soon result in a loss of money. Traders must know themselves as well as they know the markets, and vice-versa. Negative feelings towards any person, or one's self, must be replaced with the understanding that these feelings are choices the trader has made that will eventually cause personal and financial destruction. Negative feelings prevent the trader from realizing his maximum growth potential because his choices for growth have been limited by his self-defeating thoughts. The mind's electrochemical network sends energy impulses throughout each atom of the body as it thinks. Thoughts create feelings experienced by the trader. Traders should take trades based on scientific price action analysis, not feelings. Deschapelles, the French chess champion, would give his opponent a pawn before the game began. This action always provided the necessary excuse for losing. Give nothing away when trading markets; enough will be taken from you!
The free Chart Scan weekly newsletter is designed to assist you in becoming a better trader by showing you, in the context of the markets, how to apply the Law of Charts™ in today's markets.
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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.
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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.
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