Edition 316      Wednesday, September 15, 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 EUZ0 – JYZ0: long December 1010 Euro FX and short December 2010 Japanese Yen Today we consider a currency spread: long December 1010 Euro FX and short December 2010 Japanese Yen (EUZ0 – JYZ0). This spread has been in a downtrend since October 2009, reaching a new low around 7.50. Usually around this time of the year seasonality kicks in and moves the spread higher for about 2 weeks (09/13 – 09/30). Will this happen again this year? The double low around 7.50 and the tiny 1-2-3 low might be a sign the spread could move some points higher now, but I feel it is still a high risk spread, with a risk of about $2,500 per spread contract. Smaller traders might want to use the mini contracts (1/2 of the big contracts) or look into ETF’s (FXE – FXY).

Previous Trades

On September 1 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a Soybean Meal calendar spread: long December and short July Soybean Meal (SMZ0 – SMN1) at -3.0 limit GTC (scaling in first lot). Suggested risk is $350 (trading at least 2 lots). Comment: This spread is moving lower in big steps. Because the spread might fall even more, I will enter with only the first lot, keeping the second for later (at -6 if it moves down even further)."

Here's how we suggested managing this trade:

09/02  It was possible to enter with the first lot at -3.0. Let’s see how this spread develops over the next few days/weeks.

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, how long will it take to become a consistent winner?"

Andy: Many novice traders underestimate how long it takes to become consistently profitable. They assume they can trade profitably in a matter of months, whereas veteran traders will tell you that such consistently profitable trading may take several years. And it's difficult to achieve. It requires great effort and persistence to become a steady winner, yet many aspiring traders think only minimal effort is needed. For example, they may think they can trade profitably by treating trading as a game rather than as a serious business. They over-estimate their ability level. They overconfidently think that they have skills and abilities that they do not yet have. Don't ever underestimate the tendency to be overconfident. Conquer the tendency to trade beyond your skills by cultivating a sense of healthy scepticism regarding your trading skills and your trading strategies. Be realistic about what you can actually achieve.

In the end, it's important to not get your hopes up too high. The only way you'll achieve profitability is by setting realistic goals based on realistic expectations. You must accept the fact that trading is just plain hard work. You'll have to put in a great effort to achieve success. With enough persistence, hard work, and determination, however, you will build up the skills you need to become a consistently profitable trader.

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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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