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Spread Scan Issue: July 8, 2009 - Volume 254
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:
- Andy's Spread Trading Example
- Previous Trades
- Andy Jordan's Trading Bites
- The Life Index For Traders: A great tool that simplifies the process of tracking, charting, and evaluating your trading and your life, saving you valuable time
- Next Joe Ross Live Chats for Traders: Wednesday, July 8, 2009
- About Joe Ross and Andy Jordan
- TE Traders Forum
- Contact Us
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 WU9 – CU9: long September '09 Wheat and short September '09 Corn (ECBOT)
Today we consider an inter-market spread in the grains (ECBOT): long September '09 Wheat and short September '09 Corn (WU9 – CU9). In March and April, the spread traded in a range with a low at around 150 and high at 175. After the breakout in May, the spread reached a high of almost 250, but dropped back quickly in June to the level of 175. It seems the March and April resistance level of 175 has now become the support level. As long as this level holds, seasonality (07/07 – 08/26) could help to move the spread higher again.
Traders may want to enter the spread at a close above 190. Initial margin is $1,728 (reduced). Suggested risk is $1,500. Initial projected objective is $1,500, then higher.
On June 15 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering an inter-market equity spread 500*FCQ9 – 400*LCQ9 at $16,000 or better. Initial margin is $1,705 (fractionalized credits). Suggested risk is $1,000. Initial projected objective is $1,000, then a move higher. Basis is a seasonal (6/15 – 7/8) and a 1-2-3 low."
Here's how we suggested managing this trade:
06/16 We might get a chance tomorrow.
06/17 In at approx. $16,000. Suggested mental stop on close at $15,000.
06/29 It was possible to cash in the first lot at $16,800 or better. Suggested mental stop on close at $16,000.
06/30 Suggested mental stop on close at $16,600.
07/01 Suggested mental stop on close at $16,900.
07/02 Suggested mental stop on close at $17,100.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
Day Trading Is Like Guerrilla Warfare
written by Joe RossThere are only two kinds of day traders: the quick and the dead. Day trading is like guerrilla warfare. The quick seize opportunities immediately, move their stops to break even as soon as possible, and capture as much money as is possible in the shortest amount of time. The dead are never quite sure when and how to enter a market, or where to get out. These dead turn into “Three Month Wonders,” because after three months, successful traders wonder where they went to. So do their brokers. I have spoken with brokers who have never had a day trading customer who was actually a winner.
In relation to markets, there are three kinds of traders: those who know what is going on and take action; those who know what is going on and do nothing; and those who don’t know what is going on and can do nothing. These last ones are suffering from an inability to pull the trigger on their trading rifle. Sadly, that includes far more aspiring traders than you would care to imagine. These people have been badly burned, burned too often, or both, so that when they finally do know what to do, they are unable to execute.
Generally, this inability to act stems from the person's not being willing to risk the pain any longer. Their dread of pain is stronger than their hope of winning. In many cases, due to consistent trading losses, they have inculcated into their psyche the notion that they are losers. Once a person accepts the idea that he/she is a loser, it is extremely difficult to bring that person back to the idea that he can win. Hope has been lost to the extent that they begin to look for a miracle way to trade. Any confidence in themselves is gone.It is difficult to recuperate from being "chewed up and spit out" by the markets. But we have students who were determined enough, who would not accept defeat, and who started over again from the beginning of studying the basics, of sorting out and discarding wrong mindsets in order to face the realities of the markets, and who learned self-control and how to run their trading in a businesslike manner. In the process, they developed stronger character as well as better skills, and emerged winners in the "game of life" and in the world of tradng.
What is it?
The "Life Index for Traders™" simplifies the process of tracking, charting, and evaluating your trading and your life, saving you valuable time.
The Life Index™ is a simple concept that, when applied diligently, will guide you into becoming a more successful trader as well as a more successful person. Joe Ross developed it many years ago to help build the right kind of character and to develop the right mindset for trading.
Many of you know about the Life Index™ from Joe's bestselling book "Trading Is a Business". He uses the Life Index™ to chart his trading life, and it really changed his life for the better. Any or all aspects of his life that impact his trading can be charted. You can do it, too! However, there is one thing the book does not provide, and that is an easy, practical way to quickly implement the Life Index into your trading life. Because we live in an extremely fast-paced world, with little spare time, Joe asked his protégé, William Vanecek, to create a tool, the Life Index for Traders (LIFT), that would enable anyone to immediately be able to start charting and using his/her own life index. It's fantastic!
Plus, Joe wants to give you another important trade management tool as a special Bonus: his Equity Evaluator™. These are his two favorite management tools, and he credits these two tools with his ability to master self-discipline as a trader. Please follow this link to the Trading Educators main website to find out more...
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 July 2009:
Wednesday, July 08, 2009
Wednesday, July 15, 2009
Wednesday, July 22, 2009
Wednesday, July 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 July 2009:
Wednesday, July 08, 2009
Wednesday, July 15, 2009
Wednesday, July 22, 2009
Wednesday, July 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 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,
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.
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We
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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 fifty years ago. He is now in his seventies, enjoying sharing his experiences of many years through his books, seminars, individual tutoring, 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!