Edition 312      Wednesday, August 18, 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 100*SMU0 – 600*BOU0: long September 2010 Soybean Meal and short September 2010 Soybean Oil Today we consider an inter-market equity spread in the Soybean Complex: long September 2010 Soybean Meal and short September 2010 Soybean Oil (100*SMU0 – 600*BOU0). After moving up nicely in June and July, the spread has retraced about 50% of its last up move. Will the spread keep on moving higher again after retracing down to $4,388 last Wednesday, and will a breakout of the current 1-2-3 low be the right entry signal? Please note: because of the different values of each unit move of the Soybean Meal and the Soybean Oil, we have to multiply the buy side by 100 and the sell side by 600 to get the right equity chart. The spread is 1:1.

Previous Trades

On August 10 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Soybean Meal calendar spread: long September and short December Soybean Meal (SMU0 – SMZ0) at 6.5 limit. Suggested risk is $200; initial projected objective is $200, then higher. Basis is seasonal (8/10 – 8/31) and a possible bottom around 6.0. FN for SMU0 is 8/31. Comment: The chart doesn’t look very nice but because of the small seasonal time window I would give it a chance at the current level."

Here's how we suggested managing this trade:

08/11  In at 6.5; suggest exiting on a close below 5.0.

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Andy's Trading Articles

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Trading and Emotions

Letting your emotions influence your trading decisions is virtually a guarantee that you will lose as a trader. If you are going to survive as a trader, you have to bring your emotions under control. If you find that your emotions are swinging up and down as you trade, you have to confront the resulting feelings and deal with them. No one can do this but you.

One way to keep emotions under control is to make sure you enter every trade with a clearly defined plan, so that there are no emotions involved. Enter a trade in accordance with your trading plan, set a protective stop, and if you get stopped out, don't berate yourself. Just look for another trade, and while you're looking, keep in mind that your search can be in some other market or time frame — you do not have to marry any market or time frame.

Keep your poise and composure. Do not allow trades to frustrate you. If you take the time to work out clear trading plans, you can keep your emotions out of the picture in order to trade objectively and logically.

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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:

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