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 CDM1 - ADM1: long June 2011 Canadian $ and short June 2011 Australian $ Today we consider an inter-market spread in the currencies: long June 2011 Canadian $ and short June 2011 Australian $ (CDM1 - ADM1). After moving sideways for several months, the spread broke out to the down side in April, and is now forming a 1-2-3 low for a possible trade to the up side. Seasonality indicates that the Canadian $ outperforms the Australian $ during the month of May. Will this also be true this year? Because currency spreads are always very volatile and therefore risky, traders with smaller accounts might want to trade the ETF spread FXC – FXA instead.

Previous Trades

On April 28 we told subscribers of our professional daily spreads & position/swing trading newsletter, Traders Notebook, "Consider entering a Lean Hogs calendar spread: long August and short July Lean Hogs (LHQ1 – LHN1) at a close above 0.225. Suggested risk is $300; initial projected objective is $300, then higher. Basis is seasonal (5/10 – 6/7) and a 1-2-3 low."

Here's how we suggested managing this trade:

04/28 In at approx. 0.300 (the trade was triggered in the last minute before the pit close. If you are not already in this trade, I suggest using a limit order at 0.300 over night); suggested first target at 0.700; suggested stop on close at -0.100.

04/29 It was possible to cash in the first lot at 0.700; suggested stop on close at b/e.

05/02 Suggested stop at 0.500; suggested second target at 1.500.

05/03 Spread hit the suggested second target at 1.500; suggested stop on close at 0.600.

05/04 Suggested stop on close at 0.900.

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 is a “Crush Spread?"

Andy: The crush spread is defined as buying one futures contract, and selling a different, but related, futures contract. Specifically, you buy soybeans and sell its respective products ─ soybean meal and soybean oil. This is referred to as being "crushed." If you buy soybean meal or soybean oil and sell soybeans, it is referred to as being "reversed crushed."

Soybeans alone have relatively little value, but when crushed, the products have great value globally. Soybean meal is of value to the farms that raise chickens and hogs, because it is rich in protein and is used to fatten the animals for market. Soybean oil is of value across an array of industries, but primarily it is used in food as one of many available edible oils. Soybean oil is also being used in a mixture to create an alternate source of energy to compete with crude oil. These uses, as well as others, give soybeans their value.

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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.
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