Edition 320      Wednesday, October 13, 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 NGX0 – NGZ0: long November 2010 Natural Gas and short December 2010 Natural Gas Today we consider a Natural Gas calendar spread: long November 2010 Natural Gas and short December 2010 Natural Gas (NGX0 – NGZ0). After moving mainly sideways in June, July, August, and September, the spread dropped sharply in the first week of October. Around October 12, the spread usually starts a strong seasonal up move for about 2 weeks. Will this happen again this year? So far there are no signs the spread will turn around, and traders might want to be patient and wait for the right entry signal. Because of volatility, I would recommend a high risk of about $1,000 per spread, or even a few dollars more! Scaling in (buying one lot first, and then a second lot) might be the right tool for this spread.

Previous Trades

On September 12 we told subscribers of our professional daily spreads & position/swing trading newsletter Traders Notebook, "Consider entering a currency spread: long December Euro FX and short Japanese Yen MOC on Monday. Suggested risk is $2,500; initial projected objective is $2,500, then higher. Basis is seasonal (9/13 – 9/30). Comment: This trade is mainly based on statistics with 10 winning years out of 11 and a tiny 1-2-3 low. Because of the volatility of this spread we need to calculate a very high risk. Traders with a smaller account might want to check with the broker about the Minis (1/2 the size of the big contracts) or use ETF’s (FXE - FXY)."

Here's how we suggested managing this trade:

09/13  In at approx. 8.92. Suggest exiting the spread on a close (same day) below 7.00.
09/15  Spread moved up nicely today and it was possible to cash in the first lot at approx. 11.92 (email). Suggest exiting the spread on a close (same day) below 9.0.
09/16  Suggest exiting the spread on a close (same day) below 10.0.
09/17  Suggest exiting the spread on a close (same day) below 10.4.
09/21  Suggest exiting the spread on a close (same day) below 13.6.
09/22  Out at approx. 15.50 with the second lot (only if you are trading more then 2 lots).
09/24  Suggest moving the stop aggressively higher and exiting the spread on a close (same day) below 14.6.
09/28  Suggest exiting the spread on a close (same day) below 15.6.
09/29  Suggest exiting the spread on a close (same day) below 15.9.
09/30  Out at approx. 16.30.

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

How to approach trading - Diversify

Diversification is one of the crucial factors in the success of some (but not all) trading plans, and may, in fact, make the difference between success and failure of the plan. Putting all one's eggs in one basket is not a good idea for some traders. This approach takes the position that rather than trading ten contracts in one market, look to trade smaller amounts in several different markets. The aim of diversifying is to substantially lower the draw down, minimize the equity swings, and hopefully increase the overall profit. This can represent a more efficient use of equity capital. Diversification usually entails avoiding highly correlated markets to increase your chance of success. Some say that trading soybeans, soybean oil, and soybean meal does not represent three different trades, but one trade. Traders generalizing in this way display a great deal of immaturity.  There are many times that soybeans follow a path entirely different from that of soybean oil.  Trade each market based on its individual characteristics and price action.  However, when markets are highly correlated, a trader who trades them simultaneously may have a bigger draw down and increase his chances of ruin.

Different markets trend or swing well at different times. Someone who trades only one market may become so frustrated with the losses, the time lost, or the trading strategy, that he gives up before the market becomes tradeable again. For diversification, pick a good handful of unrelated markets to build a portfolio, which can lead to a lower maximum draw down, and generally more consistency.

How YOU can have a profitable
Trading Business trading Futures

Whether you've been trading for years or are just a beginner (or anywhere in-between), there is much basic detailed information about this business that most traders do not know, and are unaware that they need to know.

You can increase your chances for trading success when you know and understand the background and workings of the business of trading. Joe's Futures Course arms you with vital information and insights - all contained in 21+ lessons of "From the Beginning."

THE MORE YOU KNOW, THE BETTER OFF YOU WILL BE

Joe Ross teaches you the basics so that you have the necessary fundamental and background knowledge and equipment to get you started, and to help you grow as a trader. The more you know, the better off you will be.

You need to know the rules and the players;
you need to know what can hurt you and
what can help you.

Order your Futures Beginners Course e-book during our
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This course, Joe's Futures Course "From the Beginning," is designed for today's Futures Trader. For more details about the course or how to order, please follow this link to our website...

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DAY TRADING SEMINAR FOR E-MINI S&P, FOREX, AND STOCKS WITH MASTER TRADER
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WHAT YOU WILL LEARN AT THIS TRADING SEMINAR WILL DIRECT YOU towards becoming a winning trader, regardless of what you day trade.

Joe will give you the information to help you succeed beyond your wildest dreams. Joe shares with you the ultimate achievement: "What you learn at this trading seminar will enable you to not only day trade any market in any time frame, but also to position trade, swing trade, intermediate-term trade, or long-term trade any market, any time, anywhere in the world, as long as you have a source of data and a way to place orders."

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FOREX AT THE MARKET TRADES

Trade #1: GBP/AUD

On September 27 we told subscribers of our professional Forex swing-trading newsletter Forex at the Market, "Consider selling GBP/AUD at 1.6430 stop-market. Suggested stop at 1.6525; suggested first target at 1.6335 (move stop-loss to breakeven when filled); suggested second target at 1.6145. Basis is a possible strong breakout in the direction of the trend.”

Here's how we suggested managing this trade:
09/28 Short at 1.6430
09/28 First target hit at 1.6335; suggested stop at 1.6435
09/29 Suggested stop at 1.6375
09/29 Suggested stop at 1.6340
09/30 Stopped out at 1.6340

Trade #2: EUR/CHF

On September 28 we told subscribers of our professional Forex swing-trading newsletter Forex at the Market, “Consider buying EUR/CHF at 1.3300 stop-market. Suggested stop at 1.3230; suggested first target at 1.3370 (move stop-loss to breakeven when filled); suggested second target at 1.3510. Basis is a possible strong breakout in the direction of the trend.”

Here's how we suggested managing this trade:
09/29 Long at 1.3300
09/29 Suggested stop at 1.3250
09/30 Suggested stop at 1.3265
09/30 Suggested stop at 1.3290
09/30 First target hit at 1.3370; suggested stop at 1.3295
10/01 Suggested stop at 1.3360
10/01 Suggested stop at 1.3400
10/04 Stopped out at 1.3400

You can greatly benefit from trading the recommended currency pairs. Currency trading can be a great way to protect and grow your capital — if you know which currency to be in, and when to be in it.

If you have questions, please don't hesitate to send them to
support@fx-atm.com

We want you to have the greatest success in trading the Forex currency pairs. I (Marco Mayer) am looking forward to helping you to learn and grow your skills as you trade this huge, but extremely volatile, Forex market. During these turbulent times, I will be at your service through the newsletter and the special Forum, to help you make good choices. And, if needed for special help, I am also available via e-mail.

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Best wishes for success in your currency trading,

Your Editor of FX-ATM

MARCO MAYER
http://www.fx-atm.com

AMBUSH METHOD TRADE AND PERFORMANCE

This is your monthly report on how Ambush performed. This time we picked one of the most popular stockmarket ETFs, the DIA, also known as the “Diamonds”.

As you can see on the chart below, while the DIA ETF made some nice moves, those usually happened within one day; on most other days a lot of traders must have had a hard time trading this market, especially at the end of August when, as you can see, the market changed its mood almost every day!

Nice conditions for Ambush!

Please take a look at the results of those trades 
(without commissions) trading 1000 DIA ETFs:

As you can see,
the Ambush Method managed to make
a total of $3.410 profits
trading 1000 ETFs.

Now that you have a taste of what the Ambush Trading Method™ is all about, we hope you will make this incredibly effective trading method part of your trading today. With this trading method you can ambush many stock index futures, commodity futures, currency futures, forex pairs, or ETFs or CFDs on any of the markets mentioned. If you want, you can ambush more than one market daily.

Marco Mayer has come up with a safer and easier way to trade a large variety of markets, with the potential of locking in a steady stream of profits. If this is what you are looking for, Marco Mayer's Ambush Trading Method™ is for YOU. The Ambush Trading Method™ is designed to perform best in sideways or slowly trending (stair-stepping) market conditions, and is more likely to fail in strongly trending, volatile markets. Statistics tell us that markets trade in congestion most of the time, and trend only 20% of the time. Thus the method will perform well most of the time, but you can further improve your results by avoiding strongly trending markets. Find out more..

If you would like a conservative, easy to follow method, then Marco's Ambush Trading Method™ is for you. Order the Ambush Method during our Fall Sale Event at 20% OFF! Minimum purchase is $150.

A WEALTH OF SPREAD TRADING INFORMATION & EDUCATION:

If you wish to review Spread Scans from the past 3 months,
please follow any of the following links to its weekly issue:

Trader's Live Chat and Trader's Euro Chat with Joe Ross

NEXT LIVE CHAT SESSIONS WITH JOE ROSS:

Wednesday, October 13, 2010

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NEXT EURO CHAT SESSION WITH JOE ROSS:

Wednesday, October 13, 2010

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You can also view our saved weekly Chat Logs in case
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Traders Forum - for Traders with passion and a desire for increasing knowledge

We created our Trading Community Forum for the purpose of providing positive, uplifting educational material to traders who want to participate. There is much to be gained from the collective wisdom and experiences of those who choose to participate. Let's share what we have learned that has been helpful. Let's all push forward to exchange new ideas and interesting concepts.

There is no "one" way to trade correctly. Trading is as individual in its nature as anything in this world can be. The only thing that is right is what works for you.

If you are willing to share what works for you, then we welcome you. Your ideas may help someone else on his/her way to success. In turn, you may pick up an idea or piece of information that will help you to become a better trader.

Joe Ross has been trading the markets, virtually all of them, beginning over five decades ago. He is now in his seventh decade of life, so he has the experiences of many years that he is willing to share, as he is already doing through his books, seminars and newsletters.

We hope you decide to join us in our forum to make your contributions as well.

You can follow this link to our forum now!

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.

For information about Joe Ross and Trading Educators, please follow this link...

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

The information contained in this educational letter has been carefully gathered from sources believed to be reliable, but accuracy cannot be guaranteed. Readers should not assume that anything written here is to be considered as a recommendation, or that any performances shown will equal performances of the past.

This educational letter is intended solely for purposes of information and does not purport to provide legal, tax, or individual investment or business advice.

Readers should consult with expert legal, tax, business, and financial counsel before considering any action on the information contained in this newsletter. The publisher and its associates, editors or employees may have taken positions in and may from time to time make purchases or sales within markets and market vehicles mentioned herein. Reproductions of this newsletter are prohibited except by permission.

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