We get a lot of questions from non-customers on how to interpret Atlas Line signals. We figured it would be best to examine a recent day that was full of Atlas Line trades that would best demonstrate multiple scenarios. Take a look at the 5-min ES chart above.
9:55 a.m., Entry – Two consecutive closing bars above the plotting Atlas Line generates a Double Bar Long order signal 10:05 a.m., Profit Target (+5 ticks) – Profit target, based on ATR, is hit
10:45 a.m., Entry – Pullback Trade is activated 11:05 a.m., Profit Target (+4 ticks) – Profit target, based on Pullback Trade rules, is hit
11:35 a.m., Entry – Pullback Trade is activated 11:55 a.m., Profit Target (+2 ticks) – Profit target, based on Pullback Trade rules, is hit
11:55 a.m., Entry – Strength Trade is activated 12:05 p.m., Profit Target (+4 ticks) – Profit target, based on Strength Trade rules, is hit
Total profit or loss for the day (excluding slippage, commission, fees, etc.): +15 ticks
Remember that the best time to trade the Atlas Line with the ES is from 9:30 a.m. to 12:00 p.m. EST. John Paul has updated all of the Atlas Line recent trades through January 17, 2014. Click here to the trade performance. Again, the trades listed on the page occurred during the preferred time frame.
After purchase, we email you the Atlas Line software and instructions. We also provide you with a training video ahead of time to teach you how to use the Atlas Line. We also invite you to the next live training session, where John Paul shows you and a handful of other new Atlas Line users how to use the software. We also provide you with a recording of the live training session. Free support is provided for the duration of your license. Click here to go to the Atlas Line purchase page.
As you may have seen from our previous videos, the free ABC Method for the ES market splits the day into three parts. For each part, your entry will be two consecutive closes that break out of the previous section. The A part of the day (morning) is usually the most volatile. Part B (2.5 hours from the start of Part A) is a leading indicator to determine if the day will trend through Part C. The same entry rules exist for parts B and C. By watching the video on the videos page, you can learn to manually plot the lines to assist your entries. As part of the Mentorship Program or the Power Price Action Course, you are provided access to this ABC software for NinjaTrader.
In case you weren’t able to make it to the webinar earlier today, here is the recording. Consecutive days, multiple markets, live audience – it’s all here! Check out the performance on the YM, ES, 6E, and ZB. In case you don’t yet know, the Atlas Line is software that plugs into your trading platform (either NinjaTrader, TradeStation, or eSignal). It then plots a line at a specific time and angle every day. Depending on how price moves in relation to the line, order signals are generated. The order signals tell you when and how to enter the market (either Long or Short). It’s quite simple to use and it comes with live training.
Recently, we have been inundated with inquiries from traders who want off the Zen-Fire infrastructure and want to switch brokers. Many of you know that Zen-Fire has relied on the Rithmic infrastructure for a long time, so why not go with the Rithmic data feed directly?
My good friend Matt Z. at Optimus Trading Group, www.optimusfutures.com, has been running the Rithmic network for years, and you can easily plugin your NinjaTrader, our preferred trading platform, directly to Rithmic. The Day Trade to Win customers have given me a really good feedback about Optimus services and the quality of the feed (low latency, unfiltered data with historical capabilities) Although there are a number of brokers who offer Rithmic, Optimus has one of the best familiarities with this software.
This is the first in an installment of ongoing trading videos where Day Trade to Win founder John Paul explains the basics of day trading. Since most traders come to us wanting to scrap their indicator setup and use only price action to trade, this Lesson 1 video focuses on the differences between indicators and price action trading.
Before we get too far ahead, indicators are little programs that run inside of a day trading platform. Indicators are meant to provide a trader with helpful advice in gauging market behavior, and in some cases, telling the trader exactly when and how to place a trade. Indicators are very appealing for these reasons. However, traders should be cautious because most indicators lag behind real-time price activity, meaning the advice they give can often be inaccurate.
At Day Trade to Win, we teach traders how to assess marking conditions using price as it plots in real-time. Using only price and its relation to time, we can estimate how good for trading the market is, where to enter the market, how much profit we should be taking, and where to put a stop loss in case the trade goes against us.
In the video, John Paul points out a common problem with the popular SMA (Simple Moving Average) indicator. Like most indicators, the SMA depends on a parameter (a configurable variable) to adjust its operation. If you do not know the correct value to use for real-time market conditions, the indicator becomes worthless. You end up looking at history to see what value worked best in the past and then adjusting the indicator for expectations of improved future results.
John Paul does not use the SMA, stochastics, bands, waves, or any other type of regular system. For a five-minute E-mini S&P chart, he typically uses a BarTimer and an Average True Range. You’ll have to watch the video to see why these tools are important and how to use them to your advantage. For TradeStation users, we offer a BarTimer for free as a download.
We previously created a post mentioning Janet Yellen’s approach to the Federal Reserve Chair seat. Leading up to her final approval, there was much controversy among members of both leading U.S. political parties as to her suitability and how she will impact the financial world.
On January 6, 2014, the U.S. Senate voted 56-26 to confirm Yellen as Bernanke’s replacement. Bernanke, best known for his attempts to lead the U.S. out of the 2008 financial crisis and recession, sees his eight-year term expire January 31, 2014. Yellen will officially take his place on February 1. Since October of 2010, Yellen has been the Fed’s vice chairwoman. Bernanke’s advice to Yellen is to listen to listen to and regard Congress as her boss. As for financial market impact due to the switchover, there is expected to be little reaction because Yellen and Bernanke have been allies.
Yellen is expected to stay the course set by Bernanke as the economy continues to recover. Her biggest obstacle may be the management of the Fed’s quantitative easing. Quantitative easing refers to the Fed’s mass buying of Treasury and mortgage bonds in an effort to keep long-term interest rates low, thus energizing the economy. Economic experts believe this massive collection of assets acquired by the Fed has served its purpose and now must be unwound. Under Yellen, the Fed will be looking to stop the quantitative easing program and tighten up the balance sheet without causing problematic waves in financial markets and the economy.
Republicans and Democrats alike have criticized the central bank for its efforts in restarting the economy and its regulation of Wall Street. Republicans are concerned about Yellen causing an inflation spike due to her “easy-money” policies. They would like to establish an “oversight project” to put the Fed under a microscope for at least a year. From which, they can draw conclusions and pass bills to regulate the Fed’s operations. Democrats argue Yellen is the best suited individual for the position at this time and that Obama made the correct choice.
What do you expect to happen when Yellen officially takes over?
The E-mini S&P 500 (ES) trades on the CME Group’s Globex exchange. CME Globex is the electronic market that trades nearly 24/7. At one point in time, open outcry floor trading, where the traders yell orders on behalf of clients in the “pit”, was the dominant form of trading. Now, anyone with a computer, the proper software, and a funded account can engage the markets. Traditional open outcry hours of trading still align with market volatility. Many of our trading methods focus on capitalizing on this volatility that occurs during open outcry hours. This is why having an understanding of pit trading is important.
Why do people still want to trade in the pit? Because of better liquidity compared to electronic trading. Executing a combination of trades and spread strategies is easier in an open outcry environment. For example, a broker can easily buy 25k in options in one day at the same price. If this was accomplished on a screen, you would likely end up moving the market as you buy.
In the CME pit, there are usually up to 200 present on a given day. While it may seem hectic, checks and balances, etiquette and rules are practiced. In some ways, the rules of pit trading are more restrictive than electronic trading.
There are two types of people in the pit: brokers and “locals” (also called market makers). Brokers represent customers who want to place trades. Locals try to make a small percentage of profit or “edge” off of each trade as frequently as possible.
Here’s an example of how the order process works:
1. A broker gets a call from a customer to get a quote.
2. The broker yells and uses a hand signal asking for the quote.
3. The locals yell back and mention two prices: what they are willing to pay for the quoted item (bid) and what they are willing to sell the item for (their offer).
4. The broker tells his customer on the phone what the locals are offering.
5. The customer decides what to buy or sell and tells the broker.
6. The broker yells out the customer’s order to the crowd and uses a hand signal.
7. Depending on order acceptance, the locals will either hold their bid, offer a different bid, or a local will yell “sold”.
8. The broker will confirm the order with the locals after handing out or dividing up the contracts. Once confirmed, he will tell the customer the details of the order.
9. Once all orders are confirmed, the orders are written down and handed to the broker’s clerk. The broker quotes the trade to the market reporters who release the information to the world. The trade is displayed on the board, allowing for additional confirmation. The clerk then confirms with other clerks the details of the trade.
10. The broker waits for his phone to ring again with another order.
Depending on the broker, customers can allow the broker to execute the order at the broker’s discretion (best price or “feel” of the market). In other cases, the customer has an exact price in mind. As a broker, the objective is to be as fair as possible to your customer, the other brokers, and the locals. A positive reputation is extremely valuable in the pit, as this helps in getting your orders recognized.
Our best wishes go to you and your family for a safe, warm, and happy holiday season and a prosperous New Year!
John Paul would also like to remind you to refrain from trading during half-days which occur during the holiday season. These half-days can make for unstable trading. Also, keep in mind the days when the markets will be closed. For the CME’s equity products (such as the E-mini S&P 500), here is the holiday schedule:
Tuesday, December 24 at 1:15 p.m. EST – Christmas Eve – Market closes early (half-day)
Wednesday, December 25 – Christmas Day – Market closed
Thursday, December 26 at 6:00 a.m. EST – Market opens (modified time) and closes at the regular time at 5:15 p.m. EST
(Trading resumes for the remainder of the week at regular times)
Tuesday, December 31 at 5:15 p.m. EST – New Year’s Eve – Market closes at the regular time
Wednesday, January 1 – New Year’s Day – Market closed
Thursday, January 2 at 6:00 a.m. EST – Market opens (modified time) and closes at the regular time at 5:15 p.m. EST
(Trading resumes for the remainder of the week at regular times)
The NYSE and NASDAQ will close at 1:00 p.m. on Christmas Eve (Dec. 25), will be closed on Christmas Day (Dec. 25), will be open regular hours on New Year’s Eve (Dec. 31), and will be closed on New Year’s Day (Jan. 1).
Regarding the 2013 trading year as a whole, John Paul’s January Effect prediction seems to be correct – the market will likely close higher than the price at the end of January, 2013. We hope you took advantage of the many long and short trades that occurred throughout 2013 as a result of the January Effect. At the end of January, 2014 John Paul will provide insight regarding market expectations for 2014, so stay tuned. For now, John Paul also believes the markets are in need of a correction, so anyone who has benefited from his predictions should now take profit and look for new setups to occur.
Thank you and happy holidays,
John Paul and the DTTW Team
In the trading world, much concern has been expressed regarding President Obama’s nomination of Janet Yellen for the position of Federal Reserve Chair. Yellen’s confirmation as Fed Chairman requires Senate approval. The current Chairman, Ben Bernanke, will see his term expire on January 31, 2014. This position would arguably make Yellen the most powerful woman in finance. From an academic view, Yellen believes unemployment and inflation are inversely related. Critics claim she is more concerned with unemployment than regulating inflation.
Traditionally, the Fed’s purpose is to regulate interest rates and money supply. During the financial crises of the last few years, the Fed’s buying of mortgage-backed securities forced the Fed to invest in a specific area of the economy. In addition, the Fed’s controversial bond-buying program sought to drive down long-term interest rates, thereby spurring economic growth. Normally, such fiscal procedures are reserved for Congress. Considering the position of Fed Chair is presidentially appointed and the Fed’s actions deeply affect the economy, any change in the Fed Chair seat results in much investor speculation and action.
Presently, both Yellen and Bernanke want to keep interest rates low in order for a smooth transition and policy continuation at the central bank. Bernanke is trying to make the In contrast, Republicans view the change to be unsettling. They believe Obama may be reshaping the Financial Reserve and offering their party nothing in return. Obama is set to appoint a minimum of four of the Fed’s seven governors. These governors shape America’s monetary policy. With so much control, Democrats will be able to capitalize on supporting lower interest rates and loosening monetary policy (a so-called “dove” financial perspective). Contrarily, Republicans favor a “hawk” position, which emphasizes the use of higher interest rates to keep inflation in check. A recent Wall Street Journal analysis claimed Yellen to be the most accurate economic forecaster among 15 Fed policy makers. With Yellen’s strong professional and academic background, she appears to be one of the most qualified candidates, despite political party debate.
Do you think Yellen is a good choice?
Do you think she will rock the boat too soon?
Do you think she was selected as part of political strategy?
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