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Spread Scan Issue: August 5, 2009 - Volume 258
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
- Spread Trading - consistently reliable, potentially profitable, and safest way to achieve real SUCCESS in trading
- Next Joe Ross Live Chats for Traders: Wednesday, August 19, 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 100*GCZ9 – 50*SIZ9: long December '09 Gold and short December '09 Silver (COMEX)
Today we consider an inter-market equity spread in the metals (COMEX): long December '09 Gold and short December '09 Silver (100*GCZ9 – 50*SIZ9). From January through April, the spread was trading in a range with a clearly defined support level around $25,000. After falling to $18,600 in May, the spread has recovered and is trading once again in its range between $25,000 and $28,500. Can seasonality (07/31 – 09/17) help to move this spread higher this year? $25,000 seems to be a logical level for the initial stop. Because of the different values of each unit move of the Gold and the Silver, we have to multiply the buy side by 100 and the sell side by 50 to get the right equity chart. The spread is 1:1.
Traders may want to enter the spread at a close above $26,500. Initial margin is $10,805 (fractionalized credits). Suggested risk is $2,500. Initial projected objective is $2,500, then a move higher. Basis is seasonal (7/31 – 9/17) and a 1-2-3 low. Comment: This is a high risk spread, recommendesd only for those with deep pockets!
On July 13 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Heating Oil calendar spread HOV9 – HOF0 at a close above -0.1105. Please ask your broker about the margin. Suggested risk is $500. Initial projected objective is $500, then a move higher. Basis is seasonal 7/21 – 8/28 and a 1-2-3 low."
Here's how we suggested managing this trade:
07/14 Suggest entering MOO.
07/15 In at approx. -0.1065. Suggested mental stop on close at -0.1165.
07/23 Suggest cashing in the first lot at around -0.1000.
07/24 It was possible to cash in the first lot at -0.1000. Suggested mental stop on close at -0.1100.
07/26 Suggested mental stop on close at -0.1080.
07/29 Spread hit suggested stop. Suggest exiting MOO.
07/30 Out at approx. -0.1110 with the second lot.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
Blowing Out the Trading Account
I believe that improper money management is by far the number one contributor to blowing out trading accounts. Many traders know this, so the question is why do we not use proper money management strategies?
There are several answers to this question. Let me list the major ones for you:Even if money management seems to be boring or possibly complicated for you, you should take some time to understand the principles. Trading is completely based on expectancy, which means “What can you expect on the long run if you follow your trading strategy?” If you follow a strategy that can make you money in the long run, proper money management will make sure you survive the bad times when your strategy is losing. Only in this way can you come out a winner in the end.
- The lack of knowledge and understanding of what proper money management is.
- Even if we knew and understood proper money management, we would still apply improper money management strategies because we are greedy and fearful.
- The lack of a trading plan lets us make decisions based on emotions rather then acting on logic.
- We trick ourselves without realizing it (i. e. by buying more or fewer contracts because we like or dislike the trade, even if our money management strategy shows clearly how many contracts we should trade).
- We don’t know ourselves well enough, and fall into all kinds of emotional traps.
Spread Trading - consistently reliable, potentially profitable, and safest way to achieve real SUCCESS in tradingSPREAD TRADING is one of the least known and best-kept secrets in the world of trading. It is, in fact, one of the most consistently reliable, potentially profitable, and safest ways to achieve real SUCCESS in trading.
A Real Mentor by Your Side
If you need a helping hand to turn your spread trading into a successful business, then we encourage you to sign up for our 1-month "Spread Mentoring Program," a complete training experience with our professional spread trader, Andy Jordan.Together, you and Andy Jordan will define the steps necessary to reach your goal, and Andy will give you a detailed plan of how to grow your trading capabilities to a professional level.
How Is It Done?
The Mentoring is done using the internet. We use the Skype platform (www.skype.com) for regular weekly communication, as well as e-mail for all the in-between questions and consultations. You will hear Andy Jordan, and you can talk directly with him (free of telephone charges) without any delays. Please note: we allow only ONE participant at a time, to make sure that the student being mentored receives the full attention he/she deserves.What Do I Need?
You will need charts of the markets you want to trade. Delayed data is fine. If you don't have charts at the moment, please contact Andy Jordan. He will help you find an inexpensive solution. You will also need the Skype software (it is free at www.skype.com), together with a headset and microphone for communication.The training is for beginning, intermediate, and advanced traders.
OUR GOAL FOR YOU:
At the end of the one-month mentoring program, you will be able to trade spreads ON YOUR OWN! You will have YOUR OWN trading plan, and you will know precisely how to trade in a profitable and consistent way.We hope this summary of the program gives you a taste of what to expect, but there is more to know about the program. For further details regarding Andy Jordan’s Futures Spread Mentoring Program, please go to http://www.spread-trading.com/futures-training.htm
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:
Next U.S. Chats for August, 2009
Wednesday, August 19, 2009
Wednesday, August 26, 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
Next Euro Chats for August, 2009
Wednesday, August 19, 2009
Wednesday, August 26, 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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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.
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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!