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.

Be sure to read through our free powerpoint spread presentation which describes the rationale for trading spreads, and gives you quite a bit of information about what they are and their advantages. Follow this link to our Spread Trading Website to read through Joe Ross' free powerpoint presentation: Spread Trading - A Whole New Way to Trade. Weekly Spread Scan Example This week we look at CLZ1 - CLN1: long December 2011 Crude Oil and short July 2011 Crude Oil Today we consider a Crude Oil calendar spread: long December 2011 Crude Oil and short July 2011 Crude Oil (CLZ1 - CLN1). After moving up strongly in December and January, the spread fell like a stone at the end of February. Since then, the spread has been trading in a well defined range between 0.30 and 1.00. Because seasonal factors might help to move the spread higher around the middle of May, traders might want to enter the spread now at the lower side of the range, or wait until the spread starts to move into the desired direction. Please note that the December Crude Oil contract is not very liquid, and you might want to use a limit order to enter or exit the spread.

Previous Trades

On April 24 we told subscribers of our professional daily spreads & position/swing trading newsletter, Traders Notebook, "Suggest entering an inter-market equity spread: long July Soybean Meal and short Soybean Oil (100*SMN1 - 600*ZLN1) at $900 or better (DAY). Suggested risk is $1,000; initial projected objective is $1,000, then higher. Basis is a 1-2-3 low and seasonality starting at the end of April. Important: The volatility of this spread is very high and therefore I would classify this spread as "high risk". It moved over $850 from 04/20 until 04/21 in just one day."

Here's how we suggested managing this trade:

04/25 In at approx. $875; suggested stop on close at $150.

04/26 The spread was over $1,400 today. Suggest cashing in the fist lot at approx. $1,500 tomorrow if possible and moving the stop to $600 after we get filled.

04/27 The spread could not make it to the first suggested target today; suggest lowering the first target down to $1,400.

04/28 It was possible to cash in the first lot at $1,400; suggested stop on close now at $1,000. Comment: my suggested stop on close is very aggressive; if you want to take it easier and if your trading account is big enough, you might want to leave the stop on close at $150.

04/29 Out at approx. $1,000. The spread recoved during the last few minutes and we might get back in later.

Visit our Spread Website for more information about our daily newsletter, Traders Notebook.

Be sure to read through our free powerpoint spread presentation which describes the rationale for trading spreads, and gives you quite a bit of information about what they are and their advantages. Follow this link to our Spread Trading Website to read through Joe Ross' free powerpoint presentation: Spread Trading - A Whole New Way to Trade.

Andy's Trading Articles

Student's Question: Hi Andy! What should I do after closing out a trade?

Andy: You must be disciplined and follow your trading plan religiously. Then once you have closed your position, you should record everything about the trade. Write down where you wanted to enter the trade, what you expected out of the trade, and what you actually got out of the trade. Make sure to include notes that will help you learn from the trade ─ what actually took place once you entered. Explain why the trade was a winner or a loser. If you keep detailed records, you can learn from past trades and start to recognize your strengths and weaknesses. Then you can build on your strengths and stay away from the trades that you have demonstrated weakness in.

Another good thing to do is to keep a diary of your feelings. Learn which feelings go with the winning trades. Keeping such a diary will help you to become a more intuitive 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.

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

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Copyright 2011. Published by Trading Educators, Inc.
Spread Scan is a complimentary educational letter.

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