Edition 293      Wednesday, April 7, 2010

Spread Scan with Commentary

Commentary by Andy Jordan Trader, Trading Mentor for Spread & Swing Trading Trading Educators, Inc. 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.

Weekly Spread Scan Example This week we look at LCQ0 – LCM0: long August 2010 Live Cattle and short June 2010 Live Cattle Today we consider entering a Live Cattle calendar spread: long August 2010 Live Cattle and short June 2010 Live Cattle (LCQ0 - LCM0). After being in a downtrend from December through to March, the spread is now showing some strength (the seasonal time window goes from approx. 03/11 to 05/10). The breakout of its 1-2-3 low might be used as an entry signal, while the March low could be a logical level for the initial stop.

Previous Trades

On March 21 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Crude Oil calendar spread: long July and short May Crude Oil (CLN0 – CLK0) at 0.75 limit GTC. Suggested risk is $200; suggested first target at 1.20, then higher. Basis is seasonal (3/27 – 4/13)."

Here's how we suggested managing this trade:

03/22  Some lots are already filled. Suggest leaving a GTC order in the market.
03/23  Filled at 0.75; suggest exiting on a close below 0.60.
04/05  Out with the first lot at 0.95 or better. Suggest exiting another lot at 1.10 and exiting the spread on a close below 0.80.

Visit our Spread Website for more information about our daily newsletter, Traders Notebook.

Andy's Trading Articles

© 2010 by Trading Educators, Inc. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc

Student's Question: "Andy, I still don’t know at what time during the day I should place my order for my outright trades. Any recommendation?"

Andy: To tell you the truth, I am having the same problem. If you had asked me two years ago, I would have told you to place the order only during the pit session. However, the volume has shifted a lot, and the overnight session in some markets has become liquid enough for trading. I personally don’t like to place my order during the overnight session mainly for two reasons: I am not around when my orders are being filled, and there is a lot of stop running. Even if we can use bracket orders or other automated strategies with all these new trading platforms, I prefer to be around whenever I receive my fills to make sure my target, and more importantly my stop orders, are in place. Nevertheless, in some markets like the currencies, I am placing the orders overnight because I do not want to miss the European session.

I am afraid I cannot give you a general answer to your question above. It depends on where you live, what markets you trade, and the way you manage your trades. You should understand that you are not physically able to trade 24 hours, even if the markets are open overnight. You will miss good trades, but you will also avoid being stopped into a false breakout if you trade only during open outcry hours. Overall, l would advise you are trying to find a way that’s comfortable for you and your way of trading.

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About Spread Scan

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.

About Andy Jordan

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 preference. 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.

Andy Jordan was born 1965 in Germany, but is currently living in the Caribbean. He has studied mathematics and business administration in Regensburg and Hagen, and holds a PhD in mathematics.

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™, and has set new standards for low-risk trading with his concepts of "The Law of Charts™ " and the "Traders Trick Entry™." Joe was a private trader and investor for much of his life, but a serious health situation in the late 80'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 trading approach.

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 tutoring student, a successful trader, wrote: "You have no idea how much improvement in my life and in my trading efforts have those three days with you brought to me."

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 CEO and integral part of Trading Educators. He is the primary author and Editor-in-Chief of the company's newsletters: Chart Scan™, Spread Scan™, Options Scan, and Traders Notebook™. 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"

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.

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