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Spread
Scan Issue: April 25, 2007 - Volume 141
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Joe Ross Spread Trading Newsletter.Each week we present spread trading examples and opportunities in order to help you become a more professional spread trader.
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Today we consider an intra-market meats spread: long June 07 Lean Hogs and short July 07 Lean Hogs (LHM7 – LHN7). After making a 1-2-3 low in April, it looks like the spread will now start its seasonal up move. I personally would consider two different entries. Entry consideration No. 1 would be entering the spread right now with a close stop at –1.0. Entry consideration No. 2 would be entering after the spread breaks out of the hook at –0.2.
Traders may want to enter the spread Market on Close (MOC) today or wait for a breakout of the hook at –0.2. Margin for the spread is $675 (reduced margin). Suggested risk is $400. Initial projected objective is $400, then a move to 2.0 or higher. Basis is seasonal (app. 4/10 – 5/10) and a 1-2-3 low.
On April 16 we told subscribers of our professional daily spreads & position trading newsletter, Traders Notebook, "Consider buying June 07 T-Bonds at 110^24 stop market (if open < 110^23). Initial margin is $1,482. Suggested stop at 110^01 (app. $720). Initial projected objective is $720, then a move to 113^00 or higher. Basis is a TTE in front of a 1-2-3 low. Suggested entry only during open outcry session."
Here's how we suggested managing this trade:
04/17 In at 110^24. Suggested stop at 110^01.
04/18 Suggest moving stop to 111^18.
04/19 Spread hit first suggested target. Suggest moving stop to break even.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
Student's Question: "Andy, I had a very good 2006 trading your spread recommendations. In the first quarter of 2007 I gave back around 30% of my profits from 2006. Now the trading is getting better again, and I have had a few good profitable trades lately. Anything I can do prevent the “up and down” (especially the down) of my equity curve?"
Andy: To be quite honest, there isn’t much you can do to prevent it. That’s the nature of trading. All you really can do is to set up the right money management. You have to make sure you can survive the draw downs to make back your money during the good times. Unfortunately, there is no way to predict if the next trade will be a winner or a loser. It is quite normal to get scared after a losing streak. But if you use good money management, even a losing streak of a few really bad trades shouldn’t kick you out of the game.
Making Spread Trading part of your trading business will certainly bring profitable rewards in due time. In order to be able to achieve this goal for your successful trading business, you need to make sure that you experience some success during your experiential learning curve. This can be achieved by accepting guidance and benefiting from the experience of a mentor who himself has not only risen to the professional level of his own profitable success in spread trading, but who can also show you how to get there, and help you achieve a better and clearer understanding along the way.
The main ingredients for your Spread Trading success is definitely to study Joe Ross' book "Trading Spreads and Seasonals," and to attend his Spread Trading Seminar or take private tutoring in his office in Texas. That way you have the basics covered from the master himself.
Then it is time to reach a higher level with coaching from a successful spread trader who was personally trained by Joe Ross himself to guide you along the way: enrolling in Andy Jordan's 1-week one-on-one online spread trading sessions, and becoming a subscriber to "Traders Notebook" are the final ingredients to round out your learning curve and to learn how to be consistently profitable in Spread Trading.
There is so much for you to learn during this whole week with Andy Jordan and the training is tailored towards YOUR own individual needs. For one whole trading week YOU will get all the attention you need to get a better understanding of Spread Trading itself, and how to spread trade the markets for profit. You will learn to select the right markets and the right spreads. Your Mentor, Andy Jordan, will show you distinct ways to dig out high probability spreads. You will develop a spread trading plan including money management, risk management, and trade management. Please follow this link to our Spread Trading Website for more details about this online program...
Next Live Spread Trading Seminars in Italy and Germany
with Joe Ross
If you have not yet attended any of Joe's trading seminars, you should seriously consider attending soon!
Joe Ross' seminars offer over 50 years of profound trading knowledge for traders of every level. They are filled with wisdom from both trading and life experience, and they will open YOUR EYES to a new, different, and better understanding of trading. His teachings are unique - the experience and knowledge he has to offer you, to your great advantage, can never be imitated by anyone else. That's how we can always clearly differentiate his seminars from any other — you will never go away empty-handed (or empty-headed) from a Joe Ross seminar.
Schedule for next seminars in Italy with Joe Ross & Francesco Fabi
May 11 + 12, 2007
Spread Trading Seminar in Ravenna, Italy
Schedule for next seminars in Germany with Joe Ross & Karsten Kagels
May 19 + 20, 2007
Spread Trading Seminar in Munich, Germany
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Disclaimer:
The Commodity Futures Trading Commission has asked us to advise you that trading spreads 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!