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Spread Scan Issue: April 8, 2009 - Volume 241
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Otherwise, welcome to this week’s issue of the Joe Ross Spread Trading Newsletter.
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 you 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 keep you informed about additional educational services and products to help you grow as a successful and profitable spread trader.
This week we look at RBK9 – RBU9: long May '09 RBOB Gasoline and
short September '09 RBOB Gasoline (NYMEX)
Today we consider a spread in the energies: long May '09 RBOB Gasoline and short September '09 RBOB Gasoline (RBK9 – RBU9). After being in a downtrend in March, the spread stopped its down move at the level of the November and December highs. Will these highs at around -5.0 work as resistance levels? If so, the spread has potential to move back up to 3.0, or even higher.
Traders may want to enter the spread at a close above -4.00. Please ask your broker about the margin. Suggested risk is $1,000. Initial projected objective is $1,000, then a move to 3.00 or higher. Basis is seasonal (4/8 – 4/27) and a possible support at the November/December highs.
On March 03 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Sugar #11 calendar spread (ICE) SBV9 – SBK9 at 0.60 or better. Initial margin is $280 (reduced). Suggested risk is $350. Initial projected objective is $350, then a move to 1.20 or higher. Basis is seasonal (3/10 – 4/13) and a 1-2-3 low."
Here's how we suggested managing this trade:
03/04 It was possible to enter the trade at 0.60. Suggested mental stop at 0.30.
03/12 Suggested mental stop at 0.40.
03/13 Suggest cashing in the first lot at 0.90.
03/18 It was possible to cash in the first lot at 0.85 (email). Suggested mental stop at break even.
03/20 Suggested mental stop at 0.75.
03/23 Suggested mental stop at 0.85.
03/24 Suggested mental stop at 1.15.
03/25 Suggested mental stop at 1.30.
03/27 Suggested mental stop at 1.38.
03/30 Suggest cashing in most of your position keeping only a few contracts.
04/01 Spread hit suggested mental stop. Suggest exiting tomorrow if not already out.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, after giving us a hard time in the second quarter of 2008, it seems the markets are calming down. What do you think about the spreads? Do you think it is safe to get back into spread trading again?"
Andy: I think spread trading was never in danger, not even during the second half of 2008. The volatility made it difficult to find any good inter-market spreads (spreads with each leg in a different market like wheat against soybeans) with a decent risk level, but it was still possible to find trading opportunities with calendar spreads (spreads with each leg in the same market but different calendar month). Calendar spreads are much safer whenever volatility increases or market conditions become less stable. When trading spreads, you might not even notice crazy market conditions such as we had in 2008.
Right now I think spreads are behaving “normally” again, including inter-market spreads. But I personally would still be cautious, especially with financial spreads like currencies or interest rates. These kinds of spreads still entail lots of risk due to the high volatility in these markets, and are only for those with deep pockets; but they also offer good trading opportunities.
"I watch your position trades and am very impressed about your ability to find the winning trades." -- TN Subscriber Kim
"Thanks for a truly great and insightful piece. I've been in this business for nearly 15 years and most of the analysis that I read is bull. You really seem to have tapped into some truth, and it is very refreshing. Keep up the good work!" -- TN Subscriber Adam
If you would like to support yourself by trading, and yet be able to spend much of your time enjoying the things you like to do, then here is YOUR shortcut to trading success!
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Meet the Masters Webinar Series:
Joe Ross In-depth 2-Hour Webinar
Tuesday, April 21 - 4:30 PM (EST)
$120 USD
Hosted by Adrienne Toghraie - Trading on Target
Joe Ross will present:
Entry setups Position sizing Stop placement How to set objectives How to find the right and comfortable time frame How to create a trading plan How to create and use a time stop And step-by-step instructions on how to find a market and test it to see if the available risk/reward works for you Register Now - http://tradingontarget.com -
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U.S. Live Chats for April 2009:
Wednesday, April 08, 2009
Wednesday, April 15, 2009
Wednesday, April 22, 2009
Wednesday, April 29, 2009
We hope you will join us!
Here
is where you login to Joe's Wednesday Chat
You can also view our saved weekly Chat Logs in case
you missed any Chats but want to be up-to-date
European Chats for April 2009:
Wednesday, April 08, 2009
Wednesday, April 15, 2009
Wednesday, April 22, 2009
Wednesday, April 29, 2009
We hope you will join us!
Here is where you login to Joe's Euro Chat
You can also view our saved weekly Chat Logs in case
you missed any Chats but want to be up-to-date.
ABOUT JOE ROSS:
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(TM), and has set new standards for low-risk trading with his concepts of The Law of Charts(TM) and the Traders Trick Entry(TM). 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 approaches to trading. 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 student, a successful trader, wrote: "Thanks again for your trust and patience...Joe is a fountain of knowledge...but it is his wisdom that really sets him apart." Joe Ross 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 an active and integral part of Trading Educators. He is the primary author and Editor-in-Chief of the company's newsletters: Chart Scan(TM), Spread Scan(TM) , Traders Money Club™ and Traders Notebook(TM). 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. Give them a way to earn while they learn, realizing that it takes time to develop a successful trader."
Joe sets forth the mission of Trading Educators as follows:
- To show aspiring futures traders the truth in trading by teaching them how to read a chart so that they can successfully trade what they see, and by revealing to them all of the insider knowledge they need in order to understand the markets.
- To enable them to trade profitably by training them to properly manage their trades as well as their mindset and self-control.
For information about Joe Ross and Trading Educators,
please follow this link...
ABOUT ANDY JORDAN:
Educator
for Spread 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 favorite. 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 has developed a number of our trading
methods, and supervises keeping them up to date.
|
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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. |
If you are willing to share what works for you, then we welcome you. Your ideas may help someone else on their way to success. In turn, you may pick up an idea or piece of information that will help you to become a better trader.
Joe Ross has been trading the markets, virtually all of them, beginning well over 5 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 as well.
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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!