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Spread Scan Issue: August 12, 2009 - Volume 259
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 WZ9 – CZ9: long December '09 Wheat and short December '09 Corn (ECBOT)
Today we consider an inter-market spread in the grains (ECBOT): long December '09 Wheat and short December '09 Corn (WZ9 – CZ9). In March and April, the spread traded in a range with a low at around 150 and high at 188. After the breakout in May, the spread reached a high of over 250, but dropped back quickly in June to the level of 188. It seems the March and April resistance level of 188 has now become the support level. As long as this level holds, seasonality (08/04 – 09/30) could help to move the spread higher again.
Traders may want to enter the spread at a close above 191. Initial margin is $1,728 (reduced). Suggested risk is $1,500. Initial projected objective is $1,500, then higher.
On August 3 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Live Cattle calendar spread LCZ9 – LCV9 at -0.700 limit (first lot) and at a close above -0.175 (second lot). Initial margin is $473 (reduced). Suggested risk is $400. Initial projected objective is $400, then a move to 2.500. Basis is seasonal (8/5 – 9/8) and a possible 1-2-3 low. Comment: the entry is quite aggressive (momentum is still to the down side) and I would enter only with the first ½ of the contracts and add on later."
Here's how we suggested managing this trade:
08/04 In with the first lot at -0.700. Suggested mental stop at -1.100.
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
Self Control
by Joe RossTo become a truly successful trader, you must become a truly committed trader. How do you put yourself in control?
Statistics and society may predict, but you alone determine whether you will succeed or fail. You alone are in control. You alone must take responsibility for your performance and your life. There are always tremendous opportunities in the markets. It is not what happens; it is what you do with what happens that makes the difference between profit and loss.
Many eventually successful traders move from trading method to trading method until they find one that suits them; one that is comfortable to run, and tests well first by back-testing, then forward testing, and finally by real testing.
Some traders never stop looking for the “right” way to trade. THAT is a problem. There are many ways to trade that can generate nice profits over time. You need to settle on a right way for you to trade:
• First, you have to believe in the process which leads to the generation of your entry signals. Does that process make sense to you?
Maybe you’re a visual sort of person who is drawn to Candlestick charting. Take the time to understand why the patters mean “reversal,” and not just accept the “picture”. Go deep. Choose a guru to follow. Maybe you learn best from mentoring. Choose wisely.
• Second, back-test and forward-test the method you decide to go with. In today’s modern world of software, there’s no excuse not to run some recent back data through your method to see what the results would have been (remember, markets have been changing recently, so going too far back will not give you information relevant to the current situation). Then forward-test to see how the method works out as each price bar appears on your chart. Be sure to use a statistically valid sample of trades for doing this.
• Third, THINK about the process you are choosing and why it’s right for you. THINK about the results you get from the back-testing and real-time testing of your system.
• Fourth, BE A MACHINE (DON’T THINK) when you are trading your method.
This is why I am a huge proponent of mental training for traders. Unless you can control yourself, you can never control your trading. In order to control yourself and your emotions, you have to believe totally in the way you trade. Do the work. Do your thinking before you trade. Then don’t think—just follow your plan.
A tool that changes your trading life for the better:
Joe's Futures Beginners E-book Course -
online download!Find your way through the vast Labyrinth of Trading Knowledge - get the real facts
Right now there are tons of information available on how to trade Futures; numerous books have been written and many websites designed to provide educational services for beginning traders who are looking for the right KNOW-HOW of trading.
But why waste time and money buying numerous resources when you can get a complete course — all in one place?Joe Ross offers YOU a TRADING STUDY COURSE,
"FROM THE BEGINNING"The Course is fully up to date for today's markets and has information for traders at all levels, from beginners all the way through to advanced.
IF YOU'RE LUCKY, YOU MIGHT FIND THIS INFORMATION IN BOOKS, BUT you might have to read through thousands of pages to get it. However, in "From the Beginning" you will find the answers all in one place.
Whether you've been trading for years or are just a beginner, there is much basic detailed information about this business that most traders do not know, and are unaware that they need to know.
The course will give you the facts you need to make
important decisions. Let us tell you more about it on our website....
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
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is where you login to Joe's Wednesday Chat
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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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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!