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Spread
Scan Issue: September 19, 2007 - Volume 162
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- Andy Jordan's Trading Bites
- Did you miss out on this move? Learn how to trade Spreads online TODAY!
A new ERA of trading is arising. - Contact Us
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Today we consider an inter-market meats spread: long October 07 Lean Hogs and short October 07 Live Cattle (LHV7 – LCV7). After a strong downmove in August, the spread stopped again at the level of around -31.00 (same low as in April 2007 and May 2007). Now we get the chance to enter on a possible 1-2-3 low at the moment the spread makes a new high. The time window goes from approximately 09/07 till 10/03, with a winning percentage of over 87% (13 winning trades in the last 15 years).
Traders may want to enter the spread at a value of -29.20. Initial margin for the spread is $790 (reduced margin). Suggested risk is $1,000. Initial projected objective is $1,000, then a move higher. Basis is seasonal (app. 9/7 – 10/3) and a 1-2-3 low. Please check with your other trades!
On September 9 we told subscribers of our professional daily spreads & position trading newsletter Traders Notebook, "Consider buying October e-miNY Natural Gas at 5.62 stop market (if open <= 5.60). Initial margin is $2,700. Suggested stop at 5.25 (app. $925). Suggested first target at 5.97, then 7.00 or higher. Basis is a TTE in front of a 1-2-3 low. Comment: If the suggested stop is too far, suggest a closer stop at 5.40. I personally would be careful taking the trade overnight due to low volume "
Here's how we suggested managing this trade:
09/10 Long at 5.62. Trade hit first suggested target at 5.97. Suggest moving stop to break even.
09/12 Suggest moving stop to 5.95.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
About Human Behavior
by Joe RossOne of the most important things to learn in this life is how we ourselves behave, not only when we are acting on our own, but when we are part of the crowd. And what few of us understand is how many of our important daily actions are not thought out in advance. We are all attempting to survive in what is basically a hostile environment. Many of our actions are in response to some sort of stimulus, whether someone else’s words or actions, or something physical like our computer going down while in the midst of a trade. It may be painful to admit, but in much of human behavior we act first and then rationalize what we did later. While we all try to be logical, in most instances the rationalization comes after the fact, if it comes at all, and in general it is not at all close to explaining why we acted in the way we did. It is tough to be honest with ourselves, but honesty with self holds the secret to success. This is nowhere more true than in trading.
A NEW ERA OF TRADING IS ARISING
SPREAD TRADING
Trading in commodities will become more important than trading in financial instruments...
Did you miss out on this $3,000 move in a spread between December and October Lean Hogs?
Are you aware of what you are missing if you don’t know how to trade spreads?
The world is entering a new era of trading where trading in commodities will become more important than trading in financial instruments. Already copper, silver, gold, grains, natural resources have reached new all-time highs. Let’s face it, the world of trading does not consist of trading only stock indexes, currencies, and debt instruments. The shaky global financial situation has come near to melt-down a couple of times in the last two years. While stocks are up in double-digit numbers, commodities are up in triple-digit numbers, and the safest way to trade in commodities is to trade spreads.Spreads offer you the best and most efficient use of your trading capital. You will regularly find spreads that are trading for one-tenth the margin required to trade in any other market. That means you can trade 10 spreads using the same amount of capital you would have to put up to trade one futures contract.
The number-one enemy of every trader is that of "stop running." Spreads completely avoid stop running. There are no stops, and so stop running cannot occur. You can spread just about anything imaginable if you understand how spreading works.
You do not have to travel far to learn spreads; you can learn comfortably and conveniently online from your computer desk or from your laptop on your couch. You can start learning TODAY!
Here is a list of just a few of the benefits of spread trading, and what you’ll learn in our Joe Ross online seminar:
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Follow this link to our website at Trading Educators, Inc. to find out more about the world's only complete Spread Trading Seminar — now online.
Learn one of the most profitable and relaxed ways to trade!
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2007 by Trading Educators, Inc
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Disclaimer:
The Commodity Futures Trading Commission has asked us to advise you that trading spreads or outright futures 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!