See the real-time Atlas Line trade at about 21:00 in this live webinar.
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Here’s the webinar from yesterday, Nov. 28. John Paul starts off by saying he expects volatility to come back to normal levels and leads into the January Effect. In short, the January Effect is a strategy used by traders to predict, with some historical accuracy, whether the rest of the new year is expected to trend higher or lower. If on January 31, 2017 price closes higher than it opened on January 2, 2017, the market is expected to trend up during the year. Of course, there will be points when price drops heavily and consistently. The Effect simply says to expect price to be up by December 2017. You can see why this isn’t a buy and hold strategy. For small-time traders, holding a position for a hundred points is not possible, and if it was, would be incredibly risky. In the video, John Paul explains how regular, retail traders can work with it.
As usual, an ATR with a setting of 4 helps determine volatile conditions. Yes, the ATR can be used with a daily chart (useful for the January Effect). Look at how the green ATR spikes match the significant movements in price. To justify an entry based on the Jan. Effect, John Paul wants to see a minimum of 4+ days to retrace. Markets like to go where they’ve previously been. It’s good to find opportunities where the market is retracing to a high that’s previously been reached. The Fibonacci Tool (F8 in NinjaTrader 7), is handy for finding entries. It’s not used in the traditional Fibonacci sense. Instead, you can configure it to draw a horizontal line halfway (at 50%). This 50% level is what John Paul uses for the entry point in the retracement. Once the 50% midpoint is passed, the goal is to be in the trade long until the new highs are tested. You’re not going for the full 40+ points on the trade. Instead, 1x the ATR value is more reasonable.