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Spread Scan Issue: June 24, 2009 - Volume 252
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. Follow this link to view this week's Spread Scan immediately or read on.
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 to "white list" us to ensure that you receive all your issues of Spread Scan. That way you can continue to enjoy learning through the best free educational trading information available, and we can keep you informed about additional trading techniques, educational services and products to help you grow as a successful and profitable spread trader.
This week we look at NGZ9 – NGU9: long December '09 Natural Gas and short September '09 Natural Gas (NGZ9 – NGU9) (NYMEX)
Today we consider a Natural Gas calendar spread (NYMEX): long December '09 Natural Gas and short September '09 Natural Gas (NGZ9 – NGU9). The spread has been trading with huge swings since April this year. It has stopped its down move 3 times at the level of approx. 1.46. Will seasonality (05/10 – 07/22) help moving this spread higher this year? 1.46 seems to be a logical place for the initial stop loss.
Traders may want to enter the spread at a close above 1.53. Please ask your broker about the margin. Suggested risk is $1,300. Initial projected objective is $1,000, then higher. Basis is seasonal (5/10 – 7/22) and a 1-2-3 low.
On June 18 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider selling November Soybeans at 1037 stop market (not before 9:30 AM CT; no entries on gap openings). Suggested stop (and reverse) at 1047; suggested first target at 1027."
Here's how we suggested managing this trade:
06/19 Short at 1037; trade hit suggested first target; suggested stop at break even. Suggest cashing in to the ones trading only one lot.
06/22 It was possible to cash in the second lot at 980 or even better (today’s e-mail).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, it seems I am repeating the same mistake again and again. Any suggestion as to what I can do before I lose all my funds? "
Andy: Anyone is allowed to make one mistake. When the mistake is repeated, watch out! The third repetition of the same mistake constitutes self-destructive habitual behavior that must be reversed. Stop all trading immediately, and thoroughly examine your self-discipline. Once the reason for the repetitive mistake is understood (usually fear, anger, greed, or guilt) it must be corrected before trading may begin again. Some traders lose money because they are atoning for guilt feelings or gifts they feel are undeserved. Such traders should donate funds to their favorite charities, not to other traders.
Any flaw in a trader's character, like greed, hatred, dishonesty, revenge, arrogance, etc., will soon result in a loss of money. Traders must know themselves as well as they know the markets, and vice-versa. Negative feelings towards any person, or one's self, must be replaced with the understanding that these feelings are choices the trader has made that will eventually cause personal and financial destruction. Negative feelings prevent the trader from realizing his maximum growth potential, because his choices for growth have been limited by his self-defeating thoughts. The mind's electrochemical network sends energy impulses throughout each atom of the body as it thinks. Thoughts create feelings experienced by the trader. Traders should take trades based on scientific price action analysis, not feelings. Deschapelles, the French chess champion, would give his opponent a pawn before the game began. This action always provided the necessary excuse for losing. Give nothing away when trading markets; enough will be taken from you.
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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 1980'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,
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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.
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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!