Spread Scan with Commentary

Commentary by Andy Jordan Trader, Trading Mentor for Spread, Swing & Options Trading at 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 well-rounded trader by showing you, within the context of the markets, how to trade spreads.

Weekly Spread Scan Example This week we look at HEQ4 - HEV4: long August 2014 Lean Hogs and short October Lean Hogs. Today we consider a calendar spread in Lean Hogs: long August 2014 Lean Hogs and short October Lean Hogs (HEQ4 - HEV4). After moving mainly sideways in April, May, and June, the spread dropped strongly later in July, just to rebound immediately to the up-side. The seasonal time window is small, but the statistics are promising. Because of the high volatility in the meat markets, this spread requires a rather high risk of about $1,000 - $1,200 per spread contract.

Previous Trades

On July 22, we told subscribers of our professional daily spreads, options, and position/swing trading newsletter "Traders Notebook," "Consider entering an inter-market spread in the energies: long March 2015 Heating Oil and short March 2015 RBOB Gasoline (HOH5 - RBH5) at a close above 25.55. Suggested risk is $1,000 per spread contract; suggested target is 39.00. Basis is seasonal and a 1-2-3 low. Comment: This spread has been in a downtrend since February, but it's giving us a 1-2-3 low for a possible entry. I am not in a hurry to enter this spread because it has a huge seasonal time window of almost 3 months. This spread was also mentioned in Spread Scan volume 517 of last week."

Here's how we suggested managing this trade:

07/23 It was possible to enter the spread at approx. 26.10. Suggested mental stop-on-close at 24.00.

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Trading Article

SPECIAL OFFER – TO RECEIVE TIMELY, USABLE SPREAD TRADING INFORMATION ON A DAILY BASIS

Over the years we have learned many things. One that is most important is to never “marry” a market, a time frame, or a particular way of trading.  Markets change, and in recent years they have changed more than in the previous fifty.

For example, in any given year you might find that spreads work extremely well, but options do not do as well. However, in a following year it could be just the opposite.

One of the great features of being a trader is that, unlike the owner of a store who has to wait for customers to come to him, a trader can go to where the money is being made!

Because markets change, a trader needs more than one strategy; more than one way to trade. During the summer of 2013 we found that trading spreads was once again greatly profitable. From that time until now, our profits have been up. You can see what I mean on the performance chart below.

What you see on the chart is the number of trades and the risk. This means that during the last 12 months we had about 35 trades, and we made a profit of 10 times the risk. Because we don't know the account structure of our subscribers, we track the profits using the unit “risk”.

An example will make it clear: Let's say we are trading $30,000 and are willing to risk 5% on each trade. This means our average risk is about $1,500 per trade, which means profits would have been around $15,000 after 12 months of trading.

We think you would agree that these are nice numbers, which is why we want to make you a special offer!

We are offering all first time subscribers a 50% discount for the first month of a subscription to Traders Notebook. 50% is a lot, which is why we usually don't do this - but we want you to have a look at what we provide in Traders Notebook on a daily basis. We are sure you and your pocketbook will benefit from it, so that you will want to become a long-term subscriber. Here is how you get the 50% discount: Add the Month-to-Month Subscription (Plan 4) to your shopping cart and ENTER COUPON CODE TN50 when you checkout. 50% will be deducted from the regular price for your first month of Traders Notebook. This offer is valid ONLY FOR ORDERS FROM Wednesday, July 30 - August 13, 2014. Not valid on previous purchases, or on orders after the specified date. This offer is only for those who are new to Traders Notebook.

Did you know that most Traders Notebook subscribers commit for 6 or 12 months at a time, and most of them have been with us for many years? Obviously, there are reasons for this. This special offer will help you to find out for yourself just how much you can benefit from this subscription. Follow this link to our website and sign up today.

More details about Traders Notebook

Thank you for signing up to receive Spread Scan and your free bonus material, “Introduction to Spread Trading,” which is complimentary with your free weekly Spread Scan subscription. This Spread Scan Newsletter is emailed to you every Wednesday. Also, you should have received one free edition of Traders Notebook.

Spread Trading offers the most efficient use of your trading capital — more efficient than any other way we can think of to trade. If you are a trader in the stock market, please realize that futures spreads are the equivalent of "pairs" in the stock market. If you trade pairs in the stock market, you can use most of that information for trading spreads in futures.

Spread trading is heavily used by the "big" traders. It is a fact that 60% of Goldman Sachs' trades are spread (pairs) trades. The large commercial commodity houses trade spreads. You will find these "big boys" like Cargill, Archer Daniels Midland, corporate farmers, commodity funds, and many of the grain storage companies are trading in spreads. Why do they do it? It is because they, too, are interested in the most efficient use of their capital, along with the generally lower risk you find in spread trading.

Anytime there is an area of trading for which there is not much information, you can be certain the insiders don't want you to know about it. Futures spreads and stock market pairs are two of the best kept secrets around. You will rarely, if ever, hear them mentioned on financial TV programs, or read about them in financial publications. It's time for you to wake up to the many, many advantages of spreads.

We would now like to bring you further along in your understanding of the interesting world of Spread Trading through a companion video, a next-step 25-minute online seminar especially prepared to give you a greater depth of understanding about how you, too, can lower your risk through the art of spreading. We know that some people find it easier to learn from a video, We hope that you will join in.

Get the "Introduction to Spread Trading" companion video here.

SPREAD SCAN FEEDBACK

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Thank you so much for your response. We will post your uplifting and encouraging feedback in our upcoming editions.

View last week's Spread Scan #517
from July 23, 2014

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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 & options 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, where he currently lives. 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 ups and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits.

Joe 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™." He 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 has written twelve major books, several E-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 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 more than 5 decades of trading and investing, Joe still tutors, teaches, writes, and trades regularly, and is an active and integral part of Trading Educators. He is the primary author and Editor-in-Chief of the company's newsletters: Chart Scan™, Spread Scan™, Traders Notebook™, and the moderator of his popular trading forum. Lately, Joe has been the chief trader for Money Masters International, where for the first time in his life he has been willing to trade money for others due to the safety and profitability of the Money Master strategies. Contact: info@mmaster.biz.

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 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 2014. Published by Trading Educators, Inc.
Spread Scan is a complimentary educational letter.

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