Trading Spreads and Seasonals

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Address:	1901 Paint Rock Cove
	Cedar Park, TX 78613
Phone # for sales:	512 249 6930
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Fax:	512 249 6931
Website:	www.tradingeducators.com
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CATEGORY: BOOKS

Description

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Book title: Trading Spreads and Seasonals

Author: Joe Ross

Publisher: Ross Trading Inc.

Price: $ 150

Pages: 334

Last print date: N/A

Media:

Hardback

Brief description:

In Trading Spreads and Seasonals (for futures traders), Joe Ross shows you that you don't have to be afraid of the "speculative nature" of futures. This book helps you structure "winning" trades the same ways the pros do. If theory and technical formulas are what you want from a "How-to-Win" trading course, then this book is not for you. Instead, Joe brings you down-to-earth with his vast knowledge of one of the most fundamental ways anyone can ever learn to trade. "This is the way the old-timers did it, and it is a way that still works. Spread and seasonal trading are almost a lost art these days, and you have to wonder why! If you are a position trader, what better signal can you have than that this is the time of the year when the bonds have gone up 15 times in the last 15 years?" says Joe. Trading Spreads and Seasonals deals with reality trading and presents you with dozens of easy to follow charts and graphs, and examples of real-life trades that will refine your trading skills. It contains a review of the basic tenets of seasonal trading, seasonal spreads, and outright seasonal futures trades. Because nowadays so few know that trading spreads and trading seasonally are basic to trading commodities, this book contains a listing of other references that will make you a better trader. As with all of Joe's books, there is much, much more content than we are able to describe here. The book contains well over 300 pages. You might want to read what Joe himself wrote about the reasons for writing this book. The text for that is contained in the following paragraphs: Spread trading is virtually a lost art except among professionals, who, by the way, have never stopped using them since the beginning of trading. Spreading was one of the ways I learned to trade, and knowing how to use spreads saved my trading life numerous times. There are a number of good reasons to trade spreads: 1. Very low margin requirements. 2. Much better odds of being successful than with futures or options. 3. Every spread trade has you hedged. You give up the risk of price movement and replace it with the smaller risk of the differential in the spread. 4. You are immune to stop running because you are in two different related markets or two different months of the same market. 5. Spreads take away much of the volatility of most futures trades. 6. If you are only half right about the spread, you can drop the losing side and keep the winning side. 7. You have the benefit of the fact that most seasonal spreads have very high percentages of being correct. Much more so than outright seasonal futures trades. So why don't more people trade them? Because the industry has kept the public largely ignorant of spread trading. How many books have you seen out there that deal with trading spreads? Yet trading them is simple. You buy one contract and sell a different contract at the same time via a spread order, or you leg into each contract on your own, as two separate transactions. If you enter a spread by legging in, the computer will pick up the fact that you are in a spread and will hold you to only spread margins. Either way, you will pay two commissions, but the commissions are not a major factor considering that you will put up only fractional margins. Margins on spreads run about 1/5th to 1/4th those of outright futures trades. As I write this, a trade in Soybeans today will run you $1,350 per contract. But for a Soybean spread you will put up only $270, or 20% of the margin needed for an outright futures trade. Yet every point in the spread will be worth exactly the same as every point in the futures ($50). This means that the return on margin for a soybean spread is five times that of an outright soybean futures trade. Are you beginning to get the message?? It is for this reason that I wrote the book Trading Spreads and Seasonals. The whole story is in the book. I encourage every one of my students and subscribers to read it. Spread trading is probably the best way to trade that I've ever encountered. It beats the socks off both options and outright futures trades. It is far more relaxed than day trading. Much of the stress of trading is removed with spread trading. I mentioned that the professionals all still spread. Let me give you an example: Let's say that in June you decide to buy a July Corn futures and that Corn is moving up sharply due to a lack of rain in the corn belt. You submit your order to the trading floor. Since all of a sudden everyone is hot to buy Corn, the floor broker has trouble filling your order to buy. Although there is no requirement for a floor broker to sell to you (to make a market), he sells to you because he feels that it is his role to act in the capacity of a market maker. What do you think is the first thing that floor broker is going to do once he sells to you? He is going to spread off on a back month of corn, or the same month in wheat or beans. He will hedge (spread) his position until he sees an opportunity to unload that short corn contract in a profitable (to himself) situation. Years ago, when the Value Line contract was virtually dead because no one was trading it, there were always two floor traders in the Value Line pit. That's all, just two. No one else. These gentlemen were always trying to make a market in the Value Line because they owned Value Line seats, and if no one traded the Value Line, their seats would become worthless. Every once in awhile, the phone would ring and a Value Line trade would come in. The two of them would march out onto the trading floor and cry out the details of the trade, because the rules say the trade has to go to open outcry. It used to crack me up. It was really funny watching those two yelling at each other to accomplish the trade. What do you think they did as soon as the transaction was completed? You may have guessed. The one who took the wrong side of the trade made a beeline for the telephone to offset his position in the S&P 500. In other words, he spread the risk against the S&P. Today he would spread off on the Nasdaq futures, but at the time the Nasdaq futures did not exist. Apart from the profits made by an exchange, the markets exist for the benefit of hedgers. All hedgers are spreaders. They are long the underlying and short the futures, or vice-versa. Shouldn't you be a hedger as well? You can do it by learning how to trade spreads.

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