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NO CLAIM IS MADE BY JOE ROSS, TRADING EDUCATORS INC., OR BY ROSS TRADING, INC,.
THAT THE TRADING METHODS SHOWN HERE WILL RESULT IN PROFITS AND WILL NOT RESULT
IN LOSSES. FUTURES, SPREADS, AND OPTIONS TRADING MAY NOT BE SUITABLE FOR ALL
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CONCEPTS SHOWN WITHIN THIS MANUAL ARE NOT AND SHOULD NOT BE CONSTRUED AS AN
OFFER TO BUY OR SELL ANY OF THE CONTRACTS NAMED HEREIN. THE THOUGHTS
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 Joe's AMBUSH Method™
on the Wheat and Corn(CBOT)
By Trading Educators, Inc.
Version 1.0, Build 03

Table of Contents

Introduction
(PLEASE READ THE INTRODUCTION - IT IS IMPORTANT!)

What You Can Expect

Trading Rules

Examples

When to Stop Trading the Method

Ideas for Enhancements

Suggestions for Trading

Concluding Remarks
 Introduction
Joe's AMBUSH MethodTM

Have you ever been ambushed while trading grains? Would you
like to beat the traps set by insiders in the Wheat and Corn pits?
Sure you would, and we know how to do it. But you'll have to
keep reading to find out.

Wheat has been called "the pork bellies of the grain market."
Wheat is one of the most difficult markets to trade. Countless
traders have met their doom trading in the heat markets — that
is, until now!

If you've walked into a trap when you decided to trade wheat or

corn, how would you like to do a little ambushing of your own?
Yes! You can reverse the traps and set a few of your own. And
the big grain traders will not be able to do anything about it. Part
of the trick is in knowing how they trade. The other part of the
trick is in knowing they cannot change what they do!

I'm going to show you how it all works, and then you can decide
if you want to set your own ambush for the grains. To set the
trap, I use the daily charts for CBOT wheat and corn. It's a trap I
can set only about 80 times each year, so it doesn't require a lot
of work. The results were that I was able to set my ambush 86
times in a little over one year. But in trading only a 1-lot in the
wheat, and 1-lot in the corn, statistics show that the Ambush
Method™ made $14,000 during that time. Just think what 10 lots
would make! And all you have to do is trade the method about 7
times a month!

During the period we tested Joe's Ambush Method™ it made 56

wins against 30 losses, with the maximum closed out drawdown
being only $850. C'mon, you know you can lose a lot more than
that in just a couple of minutes by day trading a stock index.
How many methods that you know give 65% wins, and notice:
the profit factor is ($wins/$losses) 3.25. That's right, there was
$3.25 in wins for every $1 in losses. All you needed in margin to
trade the Ambush™ was about $1,608.

This is why we are adding the Ambush Method™ to our

repertoire of managed methods. It is one of our Blended
Methods™ for trading.

As many of you know, I am one busy guy. I don't have time to sit
around and watch markets all day. So I love the fact that with the
Ambush Method™ all I have to do is watch for the pit-traded
open in the wheat market, set my buy or sell stop, set my
objective and protective stop, and forget about it.

As you well know, all testing of such methods has to be the

result of simulated trading. In fact even a live trading record is
simulation because there is no guarantee that you would have
gotten the same results.

I have nothing left to say other than, "let's go set an ambush"!

All the best to you in your trading!

JR
 What You Can Expect

Below is the equity curve of the combined method (combining

both the wheat and corn trades) from January 2005 through
February 2006. As you can see, there are times when the
method produces fantastic results, and there are times when the
method produces solid results; there are also times when the
method is flat or losing. The method produced over $14,000 by
trading only one contract in the wheat and one contract in the
corn market, with a maximum closed-out drawdown of $850.
The longest time period in which the method stayed flat was 45
days.
Here are some characteristics:

 We recommend trading capital of at least $1,000 per

market (wheat or corn) plus margin for each contract
traded. Please check with your broker about the margin
requirements.
 You can expect a win-loss ratio of more than 60%. The win-
loss ratio in the testing period was 65%.
 The largest possible loss is $500 + commission per contract
and per market (wheat or corn) if rules are followed exactly.
 The maximum drawdown during the testing period was
$850.
 The method produced only 4 consecutive losses, but 6
consecutive wins.
The following examples show the same equity
curve including different commission amounts.
Note: If you need a broker who will let you trade the method for
under $25 all the way down to $15 (based on volume), please
contact us at broker_referral@tradingeducators.com.
 Trading Rules
There are only a few easy-to-understand trading rules:

Market and Trading Hours

We trade the Wheat (CBOT) and the Corn (CBOT) Futures in

the pit market between 9:30 am and 1:15 pm U.S. Central
Time.

Timeframe

We use a daily chart.

Please note: we trade each market (Wheat and Corn) totally

independently of the other; and therefore we place all orders for
the Wheat separately from the Corn orders, and vice versa.

Entry Signal

Long Signal: Buy at the high of the last trading day using a
Limit Order, but only when the market opens with a gap up (this
is when the market opens above the high of the last trading
day).
Short Signal: Sell at the low of the last trading day using a
Limit Order, but only when the market opens with a gap down
(this is when the market opens below the low of the last trading
day).

Please note: If you don't get a gap do not place any order!

Cancel your order if not filled by the close of the same day!

Do reverse your position! If you are long and you get an entry
signal to go short, reverse your position. If you are short and you
get an entry signal to go long, reverse your position.

Exit Signal

If you are long: Place a sell limit order 30 ticks above your entry.
Place a sell stop market order 40 ticks below your entry to limit
your risk. If your profit objective is filled, cancel your protective
stop, and vice versa.

If you are short: Place a buy limit order 30 ticks below your
entry. Place a buy stop market order 40 ticks above your entry to
limit your risk. If your profit objective is filled, cancel your
protective stop, and vice versa.
Whenever your target gets hit but your limit order doesn't get
filled, move your stop at least to break even, or take some
money off the table. Remember, this is a method, not a system;
therefore experiment with when and how to move your stop
closer to the price action.

Note: We do hold positions overnight!

Time Stop: In case we do NOT get filled at the target or at the

stop, we exit the trade after eight days using a MOC (Market On
Close) order. We count the entry day as the first day.

No pyramiding! We do not add any contracts to the

position in the same market!
 Examples

In the following examples we show the orders that should have

been placed in the Wheat or the Corn market, according to our
rules. Charts and values of the trades below are only examples,
and can vary from the charts you see on your chart software.

Friday, February 17, 2006.

The first three charts below show the daily chart in the Wheat
market. The market opens with a gap up, and therefore we place
a limit buy order at the high of the last trading day. We place the
following order:

Buy 1 contract at 370 1/2 limit (^2 means 1/4 in our

software, ^4 means 1/2, and ^6 means 3/4).

Later we are filled, and are long one Wheat contract at 370 1/2.

Now we have to place an order for the target and for the
protective stop. In the Wheat and in the Corn, 1 unit = 4 ticks.
Target = Entry + 30 ticks = 370 1/2 + 30 = 378.

Stop = Entry - 40 ticks = 370 1/2 - 40 = 360 1/2.

We place the following order:

Sell 1 contract at 378 limit, and sell 1 contract at 360 1/2

stop market.

The market reaches our target on the same day, and we get
filled at 378. We cancel our sell stop order at 360 1/2, and we
are done for the day.
Wednesday, June 08, 2005.

The charts below show the daily chart in the Corn market. We
are long one contract at 224 from 05/31. Our sell limit order at
231 1/2 (not shown in the chart below), and our sell stop order at
214 are still in the market.
The market opens with a gap down, so we place a limit sell
order at the low of the last trading day. We place the following
order:

Sell 2 contracts at 219 limit (2 contracts because we are

reversing the position).

Later we are filled, and we are now short one Corn contract at
219. Because we are in a new trade, we cancel both old orders
(sell limit order at 231 y%, and sell stop order at 214) with regard
to our previous trade.

Now we have to place the orders for the target and for the
protective stop.

Target = Entry - 30 ticks = 219 - 30 = 211 1/2.

Stop = Entry + 40 ticks = 219 + 40 = 229.

We place the following orders:

Buy 1 contract at 211 1/2 limit. Buy 1 contract at 229 stop

market.

On 06/10 we are still not filled on our target, but the market
opens with a gap up. Therefore we place the following order to
reverse our position:

Buy 2 contracts at 216 3/4 limit (2 contracts because we

are reversing the position).
Later we are filled, and we are now long one Corn contract at
216 3/4. Because we are in a new trade, we cancel both old
orders (buy limit order at 211 1/2 and buy stop order at 229)
regarding our previous trade.

Now we have to place the orders for the target and for the
protective stop.

Target = Entry + 30 ticks = 216 3/4 + 30 = 224 1/4.

Stop = Entry - 40 ticks = 216 3/4 - 40 = 206 3/4.

We place the following order:

Sell 1 contract at 224 1/3 limit, and sell 1 contract at 206

3/4 stop market.
This time it takes a few days, but the market reaches our target
at 224 1/4 on 06/15.

Recap: First solid blue arrow: Long. Solid red arrow, reverse and
go short. Second solid blue arrow, reverse and go long. Hollow
blue arrow, exit the trade.

Result: we make 1/4 on the trade, but we lose because of

commissions. Reversing has kept our losses small.
 When to Stop Trading the Method

Trading systems, and even rational methods, seldom work to

consistently make profits all the time: there are flat periods, and
there are losing periods. You have to know when to suspend
trading a system or rational method, and adapt it to changing
market conditions.

Fortunately there is a VERY simple way to determine when to

stop trading a method or system. Just apply your chart reading
skills to the equity curve of the method, and stop trading when
you see a downtrend emerging.

The picture below shows the equity curve of Joe's AMBUSH

Method™ (red line) and a 20-trade moving average (blue line).
Here is an easy rule:

 Stop trading with real money when the equity curve drops
below the 20-trade moving average, but continue tracking
the hypothetical results.

 Resume trading with real money when the equity curve

closes above the 20-trade moving average.

By using this simple rule, you can also estimate the maximum
drawdown you can experience at any given time. Look at the
chart above: the equity curve is currently showing $14,000, and
the moving average is approximately $12,500. You stop trading
when the equity curve goes below the moving average, so you
stop after a $1,500 major drawdown ($14,000 - $12,500) on your
overall account. Simple, but VERY effective. When you trade
only one market (Wheat or Corn) use the equity curve and the
20-trade moving average only of the market you trade.
 Ideas for Enhancements

We have presented you with a rather simple trading method that

produces good results. Here are some ideas to possibly improve
the method's performance, to be used at your discretion. Feel
free to test these ideas and modify the method to your needs.

Try a different management method, e.g. trailing a stop or

trading multiple contracts. You could try moving your stop to half
profits if prices reach your target but you are not filled on the
limit order.

Don't hesitate to move your loss-protecting stop to break even

whenever prices come close to your target.

Think about increasing the number of contracts after a losing

trade, and decreasing them again after a winning trade. Reason:
chances of having a winning trade after a losing trade are
slightly higher than they are of having another loser.

Try varying the stop loss and the profit goal. Markets change,
and next week a profit goal of 30 or 35 ticks could work very
well. You might also drop down to 25 or 20, or even fewer ticks
for a profit goal.
 Suggestions for Trading

 Do not trade the method the day before a holiday.

 Do not trade the method the day before a major grain or

crop report is due. It is not a mechanical trading system. Do
not treat it as such.

 Try a different management method, e.g. trailing a stop, or

trading multiple contracts. You could try moving your stop to
half profits if prices reach your target but you are not filled
on the limit order.

 Don't hesitate to move your loss-protecting stop to break

even whenever prices come close to your target.

 Don't be greedy. Learn to be satisfied with your piece of the

market, especially after a very large move straight up or
down.
Concluding Remarks

That's it. No "magic", no 300-page manual with complicated

formulas. We told you that we believe in simple methods.
Trading can be simple. No magic indicators or oscillators. Six
simple rules.

Can it really be so easy?

Yes!

But keep in mind that trading systems, or even rational methods

like this one, seldom work every day or over various periods of
time. Watch the market and adapt your trading. You need to
know when to trade and when to stay away from the markets,
and exercise the self-discipline to act accordingly.

We presented you with a simple concept to determine when to

stop trading.

Don't put all your eggs in one basket. Use this method in
addition to other methods and your current trading, not as your
only trading method.

Consider this simple trading method as a "trading idea" and feel

free to modify it using our ideas for enhancements or your
own.

We want your feedback, and appreciate receiving it!

Tell us about your experiences with the method. Write us about

your modifications.

Ask us questions. And keep us informed of your current e-mail

address so that we can inform you of any changes.
Here's how to contact us: support@tradingeducators.com

All the best to you in your trading,

JR