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On October 9, 2014, John Paul presented his style of price action trading to a large audience of traders. Quite a few traders followed along and placed the live trades, which worked to their favor. Many questions were asked and answered during this live webinar event.
In the video:
• The importance of proof and reading price action
• How to use the ATR to gauge whether you should be trading
• Common mistakes traders make and how to correct these mistakes
• Atlas Line signals on multiple markets
• First live trade at about 10 min. in
• Why limit the amount of time you hold a trade?
• Prove-it stop and other stop strategies used with the Atlas Line
• Retracements and re-entering trades
• Second live trade at about 39 min. in
• Why use minute charts?
• Assessing current conditions and ATR in markets besides the E-mini S&P
• Plotting of the Atlas Line Strength Trades
• Third live trade at about 1:09 min. in
• Questions and answers about products and the strategies
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On September 16, 2014 the Atlas Line produced a Long entry signal on the E-mini S&P. The Long signal occurred when price was at 1978.50 around 10 a.m. EDT. Based on the ATR, John Paul determined a profit target of about seven ticks was possible. The profit target is always based on current market conditions, i.e. volatility as gauged by the ATR. A catastrophic stop loss strategy is used as a safety net. When trading, price can fluctuate, effectively hitting tight stop losses. The stop loss has to be large enough to keep you in the trade. The catastrophic stop loss is larger than regular market activity. Note that there are three other stop strategies used and John Paul teaches you to take the stop loss that comes first. For example, a prove-it stop might get hit first, allowing for a smaller loss compared to a catastrophic stop loss. At around 3:26 in the video, John Paul advises checking whether the market is overbought or oversold. It’s best to take the Atlas Line trades as close to the initial signal to avoid this market “exhaustion.” Doing so will help avoid price stagnation and improve chances of reacing the profit target.
With the upcoming Group Mentorship Program, get the the Atlas Line with a lifetime license along with all of our trading courses and software. Click here to submit your $500 deposit. This deposit secures your seat and provides you with the first week’s materials ahead of time. You’ll be able to receive the ATO course and software for NinjaTrader right away!
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Now you can learn how to apply our ATR (Average True Range) strategies to markets other than the E-mini S&P. We use the ATR to determine profit targets, stop losses, and gauge volatility in many of our trading methods. The ATR is usually bundled with most professional trading platforms. As a bit of background, we set the ATR Period value to 4 to set the calculation to be based on the last four bars. This provides a clearer picture of what the market can realistically achieve. In any new, unfamiliar market, you can manually determine the ATR of the last four bars to help guide your trading.
Each market has a different measurement for price. This changes how we interpret the ATR values. You might be used to the ATR on the E-mini where each tick is worth .25. A tick is the smallest possible movement up or down. With the E-mini, John Paul recommends rounding down to the nearest whole tick. For example, an ATR at .824 would be considered .75 (three ticks) when calculating the profit target and stop loss.
In this video, John Paul reviews the Russell (TF), Dow Futures (YM), 30 Year U.S. Treasury Bonds (ZB), and 10 Year U.S. Treasury Notes (ZN). Pay close attention because the calculations will slightly differ for each market. Also, remember to consider how the actual dollar cost of each tick and market behavior will inherently differ with each market.
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In this video, John Paul takes a moment from one of the live classes to take a live trade. It was a short E-mini trade on August 13, 2014 at around 11:50 a.m. with an entry price of 1944.00. The profit target was one point at 1943.00. The pivot stop was two ticks above the pivot (not the entry) at 1945.75. If the profit target was touched but not filled, John Paul would have moved the stop loss to allow for a break-even trade. When starting off with any of our methods, it’s important to paper trade until you feel comfortable, then move on to one contract and see how well you do in real markets. Practice goes a long way. The Stair Step method is also discussed lightly. When fully applied, this strategy will help you identify and manage trades when price is trending in an upward or downward zigzag pattern. On such days, it can be difficult to determine if price has just become stagnant, within a range or if it’s expected to keep breaking new highs or lows. To learn more about the Stair Step and the method John Paul used in this live trade, click the Power Price Action link above.
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Here’s a recording of the webinar conducted on August 15, 2014.
• Atlas Line plotting live
• What causes the Atlas Line’s signals to plot
• How the Atlas Line can provide an overall direction or bias (long or short)
• How the BarTimer is used to time entries
• Identifying breakouts using week-based charts
• How to handle breakouts to reduce risk and identify entries
• Behaviors of most traders vs price action
• Trading the news for recent days
• Applying the ABC for recent days
• A look at the TF, YM, 6A, and 6E charts
• Best times of the day to trade
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For August 12, 2014 on the E-mini (ES) market, the Trade Scalper software produced a Short signal on 1930.50 at about 10:47 a.m. Note the Trade Scalper uses 1-min charts, so each candle represents one minute. Markets love to test where they’ve previously been. This trade uses a three tick profit target with a six tick stop. John Paul keep an eye on the ATR to make sure the market can produce three ticks. Price first tags the profit target and eventually passes through it. A second trade appears at 10:49 a.m. with the 1930 Short signal. There’s enough volatility for another three ticks. When to take two or three ticks of profit target? If the ATR is above .5 points go for two ticks, if above one 1 point, go for 3 ticks. Continue in the video and you’ll see this Short trade become profitable as well as another Short at 11:02 a.m. A Long trade at 11:32 a.m. also hits the profit target.
With purchase of the Trade Scalper, you fully learn the underlying method in order to trade without the signals. It can be used for any fast-moving market with 1-min charts. In addition, our Mentorship Program that begins on September 4, 2014 will cover this method and every other through eight weeks of live trading with John Paul. Click here to find out more about Mentorship.
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Here’s an update to last week’s video where John Paul said to watch out for a potential E-mini breakout. There’s been a lot of talk about a forthcoming reversal in the market. Load up a 1-week chart in your platform of choice and look for the large red candle for the first week of August. Based on this weekly movement, many institutional traders, trading advisers and individual traders likely went short. The following week, the market went down a bit more, came back up and closed as a doji candle. There was no confirmation whether the market wants to go higher or lower. We’ve started a new week here on August 15, so the currently plotting bullish candle may be a sign that the market will go up and test the most recent “high area” of 1978. The market may turn around on a dime and drop later today, next week, etc., but watch what happens if price hits the 1978 level.
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The Trade Scalper software for NinjaTrader will plot entry signals on your NinjaTrader charts. As you can see, two entry signals were already plotted for this August 5, 2014 trading day on the E-mini S&P 500: a Short at 1925 and a Long at 1928.25. Small triangles accompany the entry price to help identify the opportunity. Note that when you purchase the Trade Scalper, you will be able to see its horizontal and vertical lines that further help guide your trading by letting you know when an entry is about to take place.
The Trade Scalper uses a 1-min chart and can work with nearly any type of futures or currency market. The strategy is completely taught in it’s entirety. It’s completely mechanical and objective. No conventional indicators are used. When scalping the markets, you’re not looking for big profits. Look for two to three ticks each time, for a limited amount of time. The Average True Range (ATR) guides the profit target. In this case, three ticks is the goal. The stop is in place to keep him in the trade because as you know, the market can easily change direction, plot against you, then change its mind to your favor. With 11 contracts and the three tick profit target, a $412.50 profit is made within a few minutes. Within the ideal trading time of 9:30 a.m. to noon, US/Eastern, the Trade Scalper can produce over 10 trades. You might not take each one of them. The goal is to minimize and maximize reward.
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John Paul takes a look at a weekly E-mini chart, showing October of 2012 to the current week. For the last two years, the market has shown a bullish trend. Is a reversal now on the way? John Paul does not have a crystal ball. Instead, he offers solid advice: beware of false breakouts. False breakouts are market activity that lure traders in one direction, only to reverse against their trades. It seems as though the E-mini produces a false breakout condition every two to three months. For the week of August 1, 2014, the chart shows a large, red candle, indicating a false breakout could be occurring. If this is indeed a false breakout, watch for the market to test the previous high. It may be too early to consider this the long-term bearish trend traders have been expecting.
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On July 30, 2014, the Atlas Line produced a short trade around 10:00 a.m. US/Eastern with an entry price of 1967.25. Many Pullback and Strength trades occurred, which provided additional opportunities to the short side.
In the July 31 portion, you can see how a typical E-mini morning session begins while using the Atlas Line At around 10:00 a.m. US/Eastern, a second consecutive bar closed below the Atlas Line, generating a Short signal at 1950. Using NinjaTrader’s ATM Strategy area, John Paul defines the profit target and stop loss before the trade is placed. The profit target is always based on current market conditions. In this case, the ATR (with a Period setting of 4) shows a value of 3.4, which is rounded down to the nearest whole tick value, being 3.25 (remember that the E-mini works in .25 tick increments). This is a big trade – 3.25 points. The three stop strategies he uses work to minimize risk. Fortunately, the profit target was quickly reached. Two Strength trade signals appeared, which provided another entry. John Paul was happy with the $1,950 in profit trading 12 contracts, so he opted not to continue further.