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Spread Scan Issue: April 15, 2009 - Volume 242
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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 BOZ9 – BON9: long December '09 Soybean Oil and short July '09 Soybean Oil (ECBOT)
Today we consider a Soybean Oil (ECBOT) calendar spread: long December '09 Soybean Oil and short July '09 Soybean Oil (BOZ9 – BON9). After being in a downtrend in February, the spread went mostly sideways in March with support around 0.75. The two month downtrend (blue line) was broken last Thursday with a close at 0.80. Is this already the beginning of its seasonal (04/29 – 06/29) upmove, or will the spread move back down to test the March low again?
Traders may want to enter the spread at 0.80 limit. Initial margin is $203 (reduced). Suggested risk is $100; initial projected objective is $100, then a move higher. Basis is seasonal (4/29 – 6/29). Comment: Because of the lower risk, this spread is mainly for traders with a small account.
On April 05 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering an inter-market equity spread 500*FCK9 – 400*LCM9 at $14,700 or better. Initial margin is $2,637 (fractional spread credit). Suggested risk is $700. Suggested first target at $15,300, then a move higher. Basis is seasonal (4/5 – 5/19). Comment: This entry is quite aggressive with an entry at the low of the last swing."
Here's how we suggested managing this trade:
04/06 In at $14,700 or better; suggested mental stop at $14,300.
04/08 Suggest cashing in the first lot tomorrow if possible at $15,150 or better (if not already done). It is always a good idea to cash in some profits before a long weekend.
04/09 It was possible to cash in the first lot at approx. $15,550. Suggested mental stop at $15,000.
04/13 Suggested mental stop at $15,300.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, how long does it take to become a successful trader?"
Andy: Oh boy, this is a tough question. Because I don’t know what “successful” means to you, we should divide traders into different groups. I think most traders can be found in one of the following groups:
Group One – these are mainly traders new in the trading business. They have read a book or two and they find trading very interesting, but they still don’t know where to start.
Group Two – these are the traders who already know what is important in trading. They know it is important to have a trading plan and they know almost everything about the markets. But their lack of discipline and other important skills is keeping them from making money. They still lose money most of the time, and they keep searching for the right entry or method instead of looking in the right place – self-discipline.
Group Three – these traders are trading break-even or are making some money, but still are not able to make “a lot” with their trading. They have a good trading plan which they follow most of the time, but there is still something missing, preventing them from consistently making money in the markets.
Group Four – these traders are consistently making money in the market. They are able to find good trading opportunities, and they are following their trading plan in a very disciplined way. They feel comfortable with what they are doing and they are not worried when their equity curve goes down from time to time because they trust in what they do.
Group Five – these are the “high class traders” making consistent profits but, in addition to the earnings of group number four, they occasionally make “tons” of money with some of the trades they push to the limits.
Statistics tell us, that we have around 75% in groups one and two, only 25% are trading breakeven or better (in day trading the numbers are even worse). Probably 10% of all traders are in group four, and only 2% in group five.
Now it depends on what “successful” means to you. For most beginning traders, being successful means they are not losing anymore. It usually takes a few years for a trader to get into group three. I think it takes so long not because it is very difficult in the beginning, I think it takes so long because most beginning traders don’t have the right orientation and they spend lots of time searching for the magic of a Holy Grail.
Once in group three, it again takes some time to move up to the next level. It requires lots of practice for each trader to find his best personal way of trading. I don’t know if it is possible to tell how long it would take to get into group four, and many traders will never make it. But to be honest, I think this isn’t important - it's your consistency and determination that counts. Making it up to group four is all a good trader will ever need.
Coming back to the question of how long it will take, this depends pretty much on how much time you lose in the beginning. You should try to get a good mentor, like Joe Ross, who knows what is going on and who is able to show you the right way. Then work hard on yourself and you will see, you'll get there even faster then you thought!
If your answer is YES, then this is a MUST-HAVE for YOU:
TRADING IS A BUSINESS
Many traders say that after reading Trading Is a Business, they became profitable for the first time. You cannot succeed in trading until you learn how to manage yourself as well as your business. Trading Is a Business teaches you how to do both, as well as dealing with risk management, money management, and trade management. You learn the right way to think. To find out more about this empowering book, visit our website by following this link...
FRESH PERSPECTIVES - Ready for YOUR active participation.
Joe's live chats are an incomparable service from Trading Educators. The chats encourage forward-thinking, and inspire others by what is shared. Gather up your questions and comments, and "meet" other traders on line. Joe Ross will answer everything he can - come and join either his U.S. Live Chat or his Euro Live Chat:
U.S. Live Chats for April 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 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.
|
 |
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!