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 read through Joe Ross' free powerpoint presentation: Spread Trading - A Whole New Way to Trade. Weekly Spread Scan Example This week we look at LHG2 - LHZ1: long February 2012 Lean Hogs and short December 2011 Lean Hogs Today we consider a Lean Hogs calendar spread: long February 2012 Lean Hogs and short December 2011 Lean Hogs (LHG2 - LHZ1). At first glance, this spread doesn't look too attractive to a spread trader. But if we ignore the down spike in July, we can see the spread may have found some support at the 2.00 area. I don't see much of a chance in using a breakout technique for this spread, but it might make sense to enter around 2.00 using a limit order if the spread moves back down to that level. Seasonality might also help move the spread higher until November.

Previous Trades

On July 18 we told subscribers of our professional daily spreads & position/swing trading newsletter, Traders Notebook, "Consider entering an inter-market spread in the Grains: long September Wheat and short November Soybeans at -690 limit (good till Friday 07/22). Suggested risk is $1,500; initial projected objective is $1,500, then higher. Basis is seasonal. Traders with smaller accounts might want to trade the minis with a suggested risk of $300. Comment: The entry into this spread is very aggressive. I am not willing to lose on the complete risk if something goes wrong. The initial stop will be around the July low."

Here's how we suggested managing this trade:

07/19 I have adjusted the entry value!

07/20 In at approx. -690; suggested stop on close at -711.

07/27 Suggested first target at -665.

07/28 The spread hit -665 twice during the trading day (second time after I sent out the email); out with some slippage at -667; suggested stop on close at -695.

08/02 Suggested stop on close at b/e; suggested second target at -625.

08/07 Suggested stop on close at -680.

08/09 It was possible to cash in the second lot around -625; suggested stop on close for the last lot at -665.

08/10 Suggested stop on close at -646.

08/17 Suggested stop on close at -640.

08/18 Out at approx. -648.

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 read through Joe Ross' free powerpoint presentation: Spread Trading - A Whole New Way to Trade.

Andy's Trading Article

Student's Question: "Hi Andy, after having given some spread seminars with Joe, what do you think is the most difficult part for your seminar attendees to understand?"

Spread trading is a bit different from straight futures trading in many points. It is a more “pure” form of trading. But at the seminars, it seems the most difficult part to understand is when we talk about “how to enter and exit a spread trade.” It is difficult for most new spread traders to understand that it doesn’t matter if you enter or exit Market On Close (MOC) today or Market On Open (MOO) tomorrow. Of course you will have a different result for each trade, but in the long run it will even out. It is the general idea that counts in spread trading, along with the ability to follow your trading plan consistently.

View last week's Spread Scan # 364 - August 17, 2011

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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. 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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Copyright 2011. Published by Trading Educators, Inc.
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