Edition 295      Wednesday, April 21, 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 LHN0 – LHM0: long July 2010 Lean Hogs and short June 2010 Lean Hogs Today we consider a Lean Hogs calendar spread: long July 2010 Lean Hogs and short June 2010 Lean Hogs (LHN0 – LHM0). After being in an uptrend in the first quarter of 2010, the spread fell strongly during the first 2 weeks in April. Traders might see this as a chance for a re-entry with a possible stop at approx. -1.00. The statistical entry date for the seasonal time window was about 2 months ago on 02/03; the statistical exit date is on 04/29.

Previous Trades

On April 12 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Soybean calendar spread: long July Soybeans and short November Soybeans at 25 limit (GTC). Suggested risk is $500; suggested initial stop on close at 17; suggested first target at 40, then higher. Basis is seasonal (4/8 – 5/7) and a possible support at approx. 20."

Here's how we suggested managing this trade:

04/13  Some self directed traders got into the spread on Sunday night at 25. Suggest exiting on a close below 18.

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

Trading is not a black-and-white game.

Many traders seem to have trouble understanding this concept. They cannot get their mind around it. Some are able to attain a composed calm and harmony when they are winning, but go berserk when losing. Others become defeatist when things turn bad. Still others become resigned or go on tilt in various ways.

They try to abolish losing completely from their trading, and do everything in their power to avoid it. The solution they choose is to tighten up their trading to the nth degree. But unfortunately, swings in fortune are part of the game and need to be included. They must be worked with and controlled, not eliminated.

This attempt to turn trading into a black-and-white game goes like this: “I’ll trade absolutely safely. I will stay only in perfect trades, and if they are not perfect, then I’ll drop out.” On paper, this seems foolproof. The problem with this strategy is that you get trapped whenever you are in the gray areas (which is often). Trading is dynamic and constantly changing, with many rough edges. Trying to be too perfect is like trying to keep your clothing and life vest perfectly arranged during a river-rafting trip. You must roll with the water as it is moving along, not try to confine and control it!

Finally, there is also the frustration aspect that occurs if you try to banish all losses from trading. Stress occurs whenever a loss happens – anger, despair, indignation, outrage. Every trade becomes a life-and-death matter. This is the result of telling yourself that you must never fail. By including losses in the system, however, we anticipate them and thereby remove all the power from them. We are cool and composed; calmly factor them in, and move on.

He who fears being conquered is sure of defeat.
-Napoléon Bonaparte

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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, the CEO of Trading Educators, 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 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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