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.
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.
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.
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.
The Atlas Line consists of the plotting line, Dbl Bar Long and Dbl Bar Short signals, and any small S (Strength Trade) and P (Pullback Trade) marks you see on the chart. These indications are plotted automatically. All you have to do to configure the Atlas Line is supply the market open time and the signals are then generated.
On July 17, 2014, two consecutive bars close above the plotting Atlas Line to generate a Long (or buy) signal at 1973.75. Notice the Atlas Line plotting as a dashed, pink line behind the large green candle. John Paul places a limit order at the closing price of the second bar above the Atlas Line, which is the entry price of 1973.75. He advises never to chase the market for a higher entry, as that will lead to smaller profits and the market possibly turning against you. The order is then filled. Notice the stop loss is rather large – this is a catastrophic stop, which acts as a safety net in case price unexpectedly decides to take off against the anticipated market direction. In most cases, this catastrophic stop is never hit – if the profit target is not hit, one of the lesser stop losses is usually hit, such as the prove-it stop, time-based stop, or pivot-stop. For all Atlas Line trades, the ATR (Average True Range) is used to calculate the profit target. The ATR provides a realistic value of volatility and what can be achieved in terms of potential profit. As shown, this first trade is good for over 1.5 points of profit. A short trade was produced about an hour later as a result of two consecutive closing bars below the Atlas Line. The signal as generated at 1968. This would have been an excellent trade.
1. Coach needs to be a good teacher – Having someone who is personable and can communicate ideas effectively is super important. John Paul has years of experience teaching traders using a live webinar format. His explanations are clear and concise. You are free to ask questions whenever you want and go over previously taught concepts that may still be challenging. Remember, what Mentorship offers is an educational experience – it’s not a trading room. We want you to become a professional trader who can engage with the markets successfully on your own.
2. Coach needs to be accessible – Individual Mentorship can be customized to your availability and time zone. John Paul answers emails from students directly, before, during, and after the eight week coaching program. We occasionally have students from Australia or other countries where the 3:00 p.m. US/Eastern Group Mentorship time is inconvenient. They love being able to access the video recordings on demand and following up with email questions. As a Mentorship student, you can email John Paul your trading questions at any time.
3. Proof of success – What are people saying about the Program? How are the reviews? Does the website offer any testimonials from real traders who partook in the education? We have a full testimonial page with over 16 video testimonials from traders who have taken our courses. And below the videos, you’ll see many written testimonials. We’ve had hundreds of students who have taken our courses. We know they’re still trading our methods because they email us to update their software licenses years after their original date of purchase. In addition, we have over three years of Atlas Line trades posted on our recent trades page.
4. Training materials need to be easy to understand – Does the website provide any indication of what the courses will be like? Are they designed for beginners or more advanced students? Day Trade to Win’s courses are full of easy-to-understand explanations and charts. We know day trading education can be intimidating, so we try our best to lower the learning curve. With the Mentorship Program, you receive courses for the ATO, Price Action Scalping, and Trade Scalper. These strategies are also taught in the live training in addition to other strategies that are live-training only. Being able to ask questions and see why a trade setup occurs greatly improves understanding. Remember that all of the live training is conducted using the most recent data (current day and recent days). This way, you can get an idea of how the market is currently playing out.
5. Practice environment required – Does the coaching program offer any sort of practice environment? You’re going to need to test what you’ve learned on the markets. At Day Trade to Win, we provide access to the NinjaTrader platform, the same platform John Paul uses. We also provide live data feeds for free upon request, so you are able to trade just like you would with real money. Remember, the only time you have to pay for NinjaTrader is when you want to trade live with real money. At that point, you fund a brokerage account and pay for a live NinjaTrader license. Up until then, there’s no cost to hone your skills.
6. Affordability – Can you afford to take the Program? Education is an investment. If you jumped in to the markets without an idea of what you’re doing, the market will have its way with your finances. It’s better to be fully prepared and be armed with strategies that have been proven and tested for years. Losses from mistakes and guessing can easily surpass the costs of a proper education. With Mentorship, the cost is less than purchasing all of our courses separately. We also split the payment three ways. With the deposit, you are able to get the first week’s course right away.
7. Assistance getting setup with trading materials – Many of our students had never traded before finding us. In fact, a large portion of our students are not the best when it comes to computers. That’s why we provide remote assistance. Upon request, we can log in to your computer and help you get set up with NinjaTrader and our courses and software. You’ll be able to practice trading in no time without any frustration or obstacles. Support is also offered after the eight weeks of training are over.
8. Ability to track progress – We offer the ability to practice in a simulated (paper) trading environment until you’re ready to fund an account with a broker. Since you’re getting into trading to actually trade money, you obviously will need a way to track your results. You’ll need a positive indication before investing into trading further. For each simulated trade you place, the NinjaTrader platform logs everything about the trade. Using NinjaTrader’s Account Performance tab, you can get instant statistical feedback on consistency, profit, loss, and overall totals.
9. Video training – Does the program offer training videos? It’s important to be able to see visual explanations and examples. We record each Mentorship training session and upload it to your personal account. You can log in and play back Mentorship training sessions at your own leisure. If a concept is a bit difficult for you, play back that portion of the video over again. We have these videos up within a few hours of each class, in most cases.
10. Integration with the charting platform – Day trading is about looking at charts and applying learned strategies. For many of the methods taught in our Mentorship Program, we have indicators programmed for NinjaTrader. Unlike other trading educators, we do not give you a ton of confusing indicators and have you blindly trade them. In fact, you do not need to use these indicators to trade since you fully learn each method. However, these indicators are great in ensuring your understanding. For example, the Trade Scalper indicator provides entry signals. You can manually find the same entries and check if they are correct by comparing with the Trade Scalper’s automated signals.
The next Group Mentorship Program begins July 8, 2014. Classes will be Tuesdays and Thursdays from 3 p.m. to 4 p.m. EDT (UTC-4). Click here to enroll.
Individual Mentorship can begin at almost any time. Send us an email at [email protected] with your availability.
Have you ever been surprised by a new bar or candle plotting without advance notice? NinjaTrader’s BarTimer is an very important indicator/tool that we instruct all of our students to use on time-based charts. Whether you are using the Trade Scalper method for quick entries or the Power Price Action method for a larger move, the BarTimer is used as a countdown to the close of the currently plotting time bar. If you are on a 5-min chart, the bar will countdown from five minutes to zero every five minutes. Likewise, a 1-min chart will countdown from one minute to zero every minute. By knowing when the current bar will close and a new bar will open, you can better position your entries, stop losses, and execute better trade management.
How do you get the BarTimer on your chart?
First, make sure you are on a minute-based chart. If you are on a tick-based chart, you will need to use the TickCounter instead, which can be considered a sister of the BarTimer.
1. Right-click the chart > Indicators
2. Scroll until you find “BarTimer” > Double-click it
3. In the parameters area on the right, set Auto scale parameter to false (although it doesn’t matter much for this indicator) > Click OK.
The BarTimer should then appear.
By default, the BarTimer appears in the lower right portion of the chart window. If you are not connected to a live data feed, you the BarTimer will say “Bar timer disabled since either you are disconnected or current time is outside session time or chart end date” instead of showing the countdown. Connect to a live data feed and the BarTimer will correct itself to display the countdown.
At Day Trade to Win, we regularly receive a question that goes something like, “How come my BarTimer counts down from 4:50 instead of 5:00?” We also get asked, “Why is the BarTimer inaccurate?”
Firstly, it’s important to understand how NinjaTrader calculates the BarTimer countdown display. The BarTimer will only count down when your NinjaTrader platform is receiving packets from the data feed Countdown only occurs when a new tick of data comes in. When a tick finally comes in, Ninja will “catch up” and display the countdown correctly. So if you are frequently seeing countdowns that start from 4:50 or so on your 5-min chart, don’t panic! NinjaTrader intentionally operates this way. Slow markets or small periods of inactivity will delay the BarTimer’s countdown display.
Watch this video to see what we mean:
It’s also important to make sure your Windows computer clock is accurate. NinjaTrader depends on the Windows time for its calculations. You have to make sure your Windows computer clock has the exact, correct time. Your Windows computer clock is usually in the bottom-left corner of your screen, displaying the current time. You can sync your Windows clock to an official time server by:
1. Close down NinjaTrader if it’s running.
2. Click the clock area > Click Change date and time settings…
3. Click the Internet Time tab at the top > Change settings…
4. Make sure Synchronize with an Internet time server is checked and then click Update Now.
5. You should see a success message > Click OK > Click OK
6. Open NinjaTrader and your BarTimer accuracy should be slightly improved.
Soon after the short trade John Paul recorded earlier in the day, the Atlas Line produced a Long trade as seen in the video above. John Paul caught the price action right before it caused the Atlas Line to generate the Long signal. You can see how John Paul knew a Long trade was likely to occur – a second bar was about to close above the Atlas Line. Remember, two consecutive closing bars either above or below the plotted Atlas Line will generated a Long or Short signal. Seen here, a long signal was generated at 1926.25. If you take a look at the green ATR value on the bottom of the chart, you can see the current ATR value at 2.3. This indicates the profit target should be rounded to 2, or 1928.25. What happens if the trade goes against you? This is why we have specific stop losses in mind. A catastrophic stop is the largest of the stops John Paul uses. In most cases, if the profit target is not hit, the time-based or prove-it stop will be hit first. You can learn about all of these stops, profit targets, and signals by purchasing the Atlas Line and attending the included live training session with John Paul. Click the blue link above to find out more.
When it comes to going long or short during breakouts, the Atlas Line can be very helpful. Notice where the Dbl Bar Short entry at 1923.75 occurred in relation to the later breakout price action. The short entry occurred after the market pulled back a little bit. The candle that candle prior to the 1923.75 entry candle is the low. Markets love to test where they’ve previously been. Instead of going long or short after a big move occurs, it’s better jump in early right after a small pullback. In this scenario, price was on its way down to test the low, and proceeded to pass through it, into profit territory as guided by the Atlas Line signal. The closing price of the second bar below the Atlas Line is what decided the direction and price for the signal. Remember that you can get the same exact signals on your NinjaTrader charts. Click the blue link above to find out more.
On Thursday, June 5, 2014 Mary Jo White, SEC Chair, announced plans to regulate high-frequency trading. At a New York City conference, she said, “The SEC should not roll back the technology clock, but we are assessing the extent to which specific elements of the computer-driven trading environment may be working against investors rather than for them.” The SEC aims to promote market stability and fairness.
The SEC is expected to propose rules that could:
- Require high-frequency traders to become registered brokers, thus allowing for more regulatory control.
- Restrict high-frequency traders from executing short-term strategies that disrupt markets via an “anti-disruptive trading rule.”
- Require firms to better manage the behavior of their algorithms to comply with regulations
Furthermore, the SEC will work with stock exchanges to fix data feed speed and quality discrepancies between slower, public data feeds used by small traders and faster, proprietary data feeds used by high-frequency traders. This comes as a result of last August’s Nasdaq public data feed failure, which halted trading in Nasdaq-listed stocks.
By working with the Financial Industry Regulatory Authority, the SEC also plans to expand disclosure of dark pools; pseudo-markets where trading occurs away from regulated stock exchanges.
These SEC announcements are the broadest response to concerns over the impact of high-frequency trading on the markets. These transactions account for the majority of U.S. trading. Concerns have intensified as a result of the book Flash Boys, which argues the stock market is rigged. The SEC’s new plans may take months for application, as the plans are likely to be met with opposition, debate, and voting.
Take a look at this video we created using a Radiolab podcast episode: