Edition 298      Wednesday, May 12, 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 CH1 – CU0: long March 2011 Corn and short September 2010 Corn Today we again consider a Corn calendar spread: long March 2011 Corn and short September 2010 Corn (CH1 – CU0). After reaching a high of 24 ¼ in April, the spread fell back down, testing its former support at approx. 20 again. At the moment, the spread shows a 1-2-3 low for a possible entry after a breakout above 22. Traders might want to use the breakout as an entry signal, or wait for the seasonal entry on 05/20. This is a long-term seasonal trade that usually lasts until 08/15.

Previous Trades

On May 2 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider selling the June Euro FX at 1.3225 stop market; suggested stop at 1.3275 and first target at 1.3175. Basis is a TTE in front of a RH. Comment: Traders with a smaller account might want to take this trade using the Forex."

Here's how we suggested managing this trade:

05/03  Short at 1.3225; cashed in the first lot at approx. 1.3185 (e-mail); suggested stop at b/e.
05/04  It was possible to cash in the second lot at approx 1.3035 or even better (see e-mail). Suggest leaving the stop for the last lot (in case you have one) at break even.
05/05 Suggest lowering the stop to 1.2910 after the nice drop today.
05/06  After lowering the stop a few times during the day we are out with the last lot at approx. 1.2620. What a ride; the last lot made over 12 times the initial risk. Probably the trade of the month!

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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’m pretty new at this. Can you tell me the rules for buy and sell stops? "

Andy: When the market trades above a buy stop price order, it becomes a market order. The first down tick after the market order price is activated determines the highest price at whcih this buy stop order may be filled. The rule to remember when placing stops is this: "Buy above and sell below." Buy stops are placed above the current market price, and sell stops are placed below the current market price. If a buy stop price is hit, the order then becomes a market order to be filled electronically or by the pit broker at the best price possible.

For example, if a buy stop is hit at 40 and the market trades 40, 45, 50, then 45, the worst fill a trader can receive is a 50, because 45 is the first down tick. The exception to this rule is a fast market condition, when no one is legally held to any price.

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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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Copyright 2010. Published by Trading Educators, Inc.
Spread Scan is a complimentary educational letter.

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