The Traders Notebook Guide
This brief document will help you get started with your trading, and should make it easier for you to understand and use “Traders Notebook,” our daily trading newsletter. We want you to understand that this document will not replace any seminar, book, or training offered by Trading Educators.
Let’s view a typical entry consideration from Traders Notebook (TN):
1 |
Spread Trade: 625*BPM2 - 1,250*SFM2 (open) |
||||||
|
Market: |
long June British Pound and short Swiss Franc |
|||||
2 |
Entry: |
MOC at a close above -$38,600 (see recommended entry/exit times) |
|||||
3 |
Targets: |
Target 1: |
$1,200 profit |
Target 2 (for one-lot-trader): |
$2,000 profit |
||
4 |
Risk: |
Max. Risk: |
$2,000 |
Initial Stop-On-Close: |
Entry - $1,200 |
||
5 |
Basis: |
Seasonality: |
03/19 - 4/19 |
& |
possible support at -$39,000 |
||
6 |
Comment: |
This spread is very risky and probably not for everyone. I will use a very close stop; either the trade works immediately or I will get rid of it. Traders with smaller accounts might look into the ETF spread FXB - FXF with a ratio of 1:2 or set up the trade at the Forex (GBP-CHF). |
|||||
|
Chart |
||||||
|
|
||||||
7 |
History |
||||||
|
03/29 In at approx. -$38,500; stop-on-close at -$39,000; first target at -$37,150. |
||||||
1”Spread Trade”, “Options Trade”, “Position Trade”
The headline of each recommendation explains the trade in a very short form using common trading symbols (Please Note: the symbols on your charting software or trading platform might be different). A spread trade recommendation in the form of A – B means: long (buy) “A”, and short (sell) “B”. If not stated otherwise, all spread recommendations are 1:1, which means buying and selling the same number of contracts. “Market” explains the trade using common wording.
Sometimes you will find a recommendation using multipliers. For example: 625*BPM2 – 1,250*SFM2. This does NOT mean we recommend buying 625 British Pound and selling 1,250 Swiss Franc contracts! When you see the multipliers, they tell you that this is an “equity spread”. When the legs of the spread have different values, the only way you can track them in dollars is to make both sides of the spread equal in value. This is done by multiplying each side of the spread by the dollar value of a full one-point move (Unit Value).
We use the multipliers mentioned above to track our spread with the right value only in US$. British Pound has a value of $625, and the Swiss Franc has a value of $1,250 per unit move. Multiplying each leg of the spread by its Unit Value gives us an “equity spread.” Please let us know if you have any problems with “equity spreads”.
2 “Entry”
This defines the suggested entry point, and if not stated otherwise it means the following: wait until the spread moves above the suggested entry on the close, and enter the trade the next day around the open (MOO) or a few minutes before the close on the same day (MOC). We recommend you do the same with the Stops. Wait until the market moves below your stop level on the close, and exit the trade the next day around the open (MOO) or a few minutes before the close on the same day (MOC). We enter and exit all trades around the open (MOO) or the close (MOC) of the pit market, even if we trade the electronic market.
Please look at the Traders Notebook table "Recommended Entry/Exit Times". It shows when markets are liquid, and the recommended times for our entries or exits. Recommended times are not set in stone. Please check the table regularly!
3 “Targets”
We recommend trading at least 3 contracts whenever possible. This makes it easier for you to manage the trade. We usually use 2 fixed Targets, and a trailing stop for the third lot. In case you are not able to trade multiple lots, we recommend you use Target 2 as your final target.
4 “Risk”
Calculating risk is a very individual decision, so we can give you only a recommendation that makes sense to us. Your trading risk depends a lot on your trading strategy and your personal trading plan. Some traders prefer to give more; others give less room to a trade. We cannot go into details of money management here, but here are some simple steps you can follow:
- Always use the same percentage of your trading account on each trade. For example, if your trading account is $20k and you want to risk 6%, you would risk $1,200 on each trade.
- Calculate the number of contracts you want to trade. Let us assume you are willing to risk $1,200 in a trade that requires a risk of $400 for each spread. You will be able to trade 3 ($1,200 / $400 = 3) contracts.
5 “Basis”
The basis defines the “main reasons” for our trading idea. We normally choose between seasonal correlation and simply “the chart pattern looks right” trades, and use the Ross Hook and the 1-2-3 chart pattern for the entry.
6 “Comment”
We always try to give you insight into our trading decisions and why we recommend a specific spread, options, or outright futures.
7 “History”
We follow the trade from the beginning to the end. Please check the History section on a daily basis to make sure you receive all the information needed for the specific trade recommendation.
Please do not hesitate to contact us anytime you have a question or comment.
“Is there anything else?”
Trading Educators has a more complete, higher quality spread-education program than anyone else in the world!
Check it out:
• Traders Notebook our daily spread trading and position trading advisory. A subscription to Traders Notebook gives you access to online coaching by Andy Jordan!
• “Introduction to Spread Trading” – a free introductory course to reveal the rationale behind spread trading.
• Manual – “Trading Spreads and Seasonals.”
• Futures Spread Trading Online Video Seminar with Joe Ross.
• Private tutoring in Spread Trading with Joe Ross.
• E-mail support for your questions.
• Free weekly Futures Spread Trading Newsletter: Spread Scan
Please do not hesitate to contact us anytime you have a question or comment.
All the best in your trading,
The Staff at
Trading Educators, Inc.
andy@tradingeducators.com
© 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.
