This webinar focuses on high volatility conditions, like those we’ve seen since the U.S. presidential election results. Traders are always faced with these questions:
• Is now the time to place a trade?
• Should I buy or sell?
• Once I’m in the trade, how much will the market move?
In the Mentorship Program that begins on Nov. 28, you can learn how to tackly all types of market conditions, plus receive all of our courses and software (including the Atlas Line and Trade Scalper). It’s the best way to save money and learn everything we have to offer. With early enrollment, we are providing the first week’s course (ATO / At the Open) ahead of time. Click here to submit your deposit and reserve your seat.
In this video, John Paul uses a CL (Crude Oil) chart to demonstrate how the ATR (Average True Range) can be used to gauge volatility as well as profit targets and stop losses. There is no need to change the ATR setting when switching between 1-min and 5-min charts. When the market is overly volatile, that would mean you have to increase the stop significantly, which increases the risk. This is why John Paul prefers to trade when the ATR is between 1 and 4 points. The election volatility pushed the E-mini and other markets well beyond normal risk levels. See the Atlas Line short trade at about 5:00 in the video. The ATR begins to exceed 6 points. When a single large candle appears (either red or green), John Paul often expects a retracement to occur. Don’t expect continuation. Very rarely do you find days that continue in one direction consistently. Markets like to go where they’ve already been, and in some cases, try to reach equilibrium. Be careful in relying on indicators. Once they “see” a large move, they can become erratic and provide very risky signals. The Atlas Line, in comparison, has rules to tell if the market is “exhausted” from making the big moves. Also, the exact rules for profit targets, stop losses, and trade management keep you objective during seductive, fast-moving market activity. Click here for more on the Atlas Line.
At about 14:40, John Paul shares the CL and the Trade Scalper. If you take a look at the Short trade at 42.82 and the accompanying signal triangle and text, you may assume this was a losing trade. The signal does indicate the entry price, but once you learn the rules, you’ll know how long to hold the trade. In this example, the rules dictated releasing the trade about three candles later (two after the fill), which would have been a winner. Fast moving markets are scary and it’s tempting to use a small stop. Remember that small stops can be hit before the big move even has a chance. Instead, John Paul increases the stop out of the regular fluctuating ATR range. At about 34:30, you can see a Trade Scalper long trade on the E-mini. The E-mini chart is revisited again at 1:03:00, so you can see what happens later. Click here for more on the Trade Scalper.
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Here’s a quick example of the Trade Scalper software for NinjaTrader on a live E-mini S&P chart. As you can see, the Trade Scalper produced five trades in a little over an hour. There was one long around 11:20 a.m. followed by multiple short signals that followed a bearish trend. A short signal (Short 2142.25) appears near where price is currently trading. This is the desired fill price. However, the ATR is quite low (around a tick) and that means the market is slow. According to the risk and reward rules of this method, you want to see the ATR value at about two or three ticks. The rules and live training go into more detail on how to avoid these conditions. The Atlas Line also provides a short signal in agreement with the Trade Scalper. Even though this scalping trade would have been favorable and the Atlas Line agrees, it was not with the risk caused by a slow market.
You can get access to the Trade Scalper and Atlas Line by registering for the upcoming Group Mentorship Program that begins on Nov. 3. Early registration includes the ATO (At the Open) course. Click here to find out more.
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The focus of this webinar is trading during the morning. For us in US/Eastern time, this “day session” starts at 9:30 a.m. and continues for the next 2.5 hours. This period reflects what was once the pit session, a time when traders who place orders physically in the trading pits instead of doing so electronically.
First, John Paul does a review of the ATR and his preferred settings. The ATR provides a measure of volatility. It does not indicate price direction. In the morning, there are often more traders engaging the markets than the afternoon. If you look back in history, you will see instances where the green ATR line rises at market open, then slopes downward into the afternoon. Fridays tend to be slower. Slower markets produce choppy conditions. Choppy conditions are when price doesn’t really go anywhere – it moves back and forth and this makes for difficult trading. In the video, John Paul shows how the ATR can look when the market is choppy. The best volatility for trading is when the ATR is between 1 and 5 points.
When traders guess market direction, they can run into problems. For example, upon seeing multiple bearish candles, you may assume the market will continue downward and place a trade. You may have entered too late and missed out on the start of the move. The Atlas Line tries to signal these opportunities in advance. At about 16:00 in, you can take a look at recent Atlas Line signals. When two bars close above or below the dashed line, expect a long or short signal to appear. If a small P or an S appears next to a candle, that is a pullback or strength trade. Generally, the profit targets for these S and P signals is one point. The main Dbl Bar signal profit target is based on the ATR. The Atlas Line offers these four ways to indicate the possible direction of the market. The slope of the Atlas Line also matters. Traders often see price follow the slope of the line. These conditions are fine – the Atlas Line will produce S and P signals. John Paul prefers intersections, because this usually means a Dbl Bar trade will occur and that has a larger potential.
At about 25:00, John Paul adds the ATO signal. The ATO is one of the first trading methods we offered, and is now found in the eight week Mentorship Program. Like the Atlas Line, the ATO provides entry signals. They look a bit different – instead of Dbl Bar, you will see Long or Short along with the entry price. The ATO stands for “At the Open”, and like its namesake, the strategy focuses on finding opportunities right after the market opens. The ATO also uses the ATR to determine the profit target. Through trade management, John Paul adjusts his profit targets to reflect the current ATR value. This is because he wants the profit to be a value price action possibly reach based on current market conditions. Many other trading systems use predefined values that cause traders to take on more risk.
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This webinar focuses on managing risk. John Paul discusses how the ATR can be used to determine profit range for each trade. The Bar Timer counts tells you when the currently plotting candle closes. Using the Bar Timer with the ATR, it’s possible to plan a profit target and stop loss. Essentially, a profit target is the “goal” of how much profit you believe the market will provide and the stop loss is how much you are willing to lose. Therefore, wouldn’t it make sense to set your stop loss to the current market price for no risk? Wrong – there’s always risk. And if your profit target is too small, there is a greater chance the constantly fluctuating market price will hit your stop loss. This is why stops that are too tight are a problem. Instead, John Paul prefers to use the ATR to determine what the market can produce. This dynamic approach changes based on “what the market can provide” instead of a fixed value. To be more conservative, he rounds the ATR down to determine the profit target.
At about 19:50 in the video, you can see the Atlas Line. There are no short or long signals yet because there needs to be two consecutive closing bars above or below. At the moment the Atlas Line was applied, there was only one closing bar. In a situation like this, you can get ready to place a short trade when the second candle closes. The bar timer is counting down and lets you know when to place that short trade, providing the bar does indeed close below the dashed Atlas Line. , the catastrophic stop loss (as its called), is generally a maximum of five points. For the maximum stop loss, John Paul doubles the ATR value to a maximum of five points. This is referred to as the catastrophic stop and it’s only hit if the profit target is not reached and the less penalizing stop losses are not hit. The main purpose of this stop is to keep you in the trade. At around 31:30, additional stop loss strategies are discussed and how they apply to the Atlas Line.
To learn other ways to improve your trading, call us at 1-888-607-0008. Using the link above to register. With your deposit for the next Group Mentorship class, we will provide you with the ATO course and software.
Get the Atlas Line signals on your chart
When adding the Atlas Line to the chart, you won’t see anything displayed until specific conditions are met. Eventually, you will see a dashed line begin to grow, most often at a diagonal angle. In the included live training, you’ll learn exactly when to expect the line to appear along with entry prices. In this video, you’ll see a Long signal when price hits 2152.75. This signal occurred because of the two close bars above the Atlas Line. The second close occurred at the 2152.75 price, so that’s the entry.
An important part of trading the Atlas Line is understanding and avoiding risk. Before entering a trade, John Paul looks for overbought or oversold conditions. He gauges this via the distance between the Atlas Line and position of recent candles. A greater distance implies greater risk. At about 2:10 here, you can see how this trade is riskier because of the distance. Another risk factor is news events. Always check a news calendar for high-priority events and when the Fed Chair speaks. Planned and unplanned news events can cause sudden, drastic changes to volatility that increase risk. Not every trade will be a winning trade. Some will result in a small win, breakeven, a small loss, or a large loss. In any case, with the Atlas Line, you are not guessing. It’s telling you exactly when to enter and it’s up to you to place the trade if the remaining risk factors are reasonably acceptable. Markets often revisit previously reached price levels.
Later on, the Atlas Line produced a Strength Trade, signified by the small letter S that appears below the candles. Since the direction is long, the rules say that future trades will be on the long side. Pullback trades are also possible, and these too have exact rules.
To get the Atlas Line and live training, you can purchase it individual or get it along with all of our other trading courses and software via the upcoming Group Mentorship class. This next class begins Oct. 19 and seats are filling up. It’s first-come, first-served, so don’t wait! Click here for the details.
On Sep. 8, 2016, you will need to roll over your CME equity index futures contracts (including the E-mini S&P) to the next contract period, December 2016. In NinjaTrader, this period is listed as ES 12-16. The next roll date after this is December 8, 2016, at which time, the March 2017 contract will be the new contract.
Click here to see the CME page with an explanation and future dates
Click here to see the official rollover instructions from NinjaTrader
Note: if you’re encountering issues getting live data after rolling over, go to this link, select your NinjaTrader version, and follow the nine or so steps to correct the contract date.
Here is how to roll over:
1. Go to NinjaTrader’s Control Center > Tools > Instrument Manager.
2. In the name box (top center of the Instrument Manager), type in the abbreviation for the market you want to roll over, e.g. ES. Click Search.
3. In the result box, click the correct market and the row will highlight. If you are rolling over on the roll date or after, notice below how NinjaTrader knows to set the Expiry date to the correct value (09-16 in this case). Click the left black triangle / arrow button so that the new ES contract is added to the list on the left. Then click OK. Optionally, you can click the old contract and click the right arrow/triangle button to remove it from the list.
From this point forward, you can open a new chart for the new contract period or switch over your current chart by using the drop-down list in the upper left corner of the chart.
Learn the rules of the Trade Scalper system
Spoiler alert – the outcome of this video is not a winning trade. Watch to see how John Paul makes the best out of the situation.
To begin with, notice how there’s a Dbl Wick Short signal on the E-mini chart. This standards for Double Wick, and it’s entirely based on wicks / price action; not moving averages, MACDs, etc. With the Trade Scalper, you’re often going for a three-tick target with a six-tick stop. It’s scalping, so the goal is smaller. Like our other trading methods, the ATR is used to assess conditions. Slower markets mean smaller profits. The inverse is also true. Correct price action trading is always relative to current market conditions. The video speeds up and you can see price try to move toward the target, but ultimately failing during the allotted time. It’s never good to stay too long in the market, certainly when scalping. Remember that one of the stop loss rules is based on time. This trade is taking too long, and therefore has met the conditions for that rule to apply. To get out at the trade at breakeven (excluding broker fees), the profit target is moved to the entry value, 2181.00. Remember, it’s not possible to get out of every losing trade this way. This is just an example of a time-based stop working as intended.
Get the Trade Scalper signals on your chart
Let’s take a look at a E-mini S&P Trade Scalper trade from Aug. 26, 2016. The Trade Scalper software produced a short signal at 2181.75. This is the exact limit order price John Paul wants to get. Typically, with market orders, you’ll lose a tick due to slippage. As with any trade, getting filled sooner rather than later, is preferred. The longer the wait, the greater the risk. Especially in scalping, you want “instant in, instant out” if possible. Scalping can be done all day long in different markets, but the conditions have to be suitable. Avoid news events, as they produce market volatility. Also, avoid the first 10 minutes of the session open and the final 20 minutes of the day. During these times, buyers and sellers are battling it out, and individual traders like yourself can get into trouble. In this trade, the profit target is about two ticks. If the profit target was not reached, you would follow the rules to exit at small profit, break even, or loss. Markets love to test where they’ve previously been, and this trade is an example of that.
Get the Atlas Line signals on your chart
Here’s a quick three-minute video of Atlas Line trades for today, August 26, 2016. First, there was a nice short trade signal produce at 9:55 a.m. EDT. The signal appeared at the close of the candle, at 2178.25. The market is neither overbought nor oversold. In fact, the signal coincides with the Roadmap and a couple of other strategies. Later in the day, an Atlas Line Pullback trade occurred, signified by the multiple P symbols that appear above the candles. With Pullback, Strength, and trades used by other strategies, it’s best to make profit as quickly as possible. Behind the 5-min Atlas Line chart, there’s a 1-min chart using the Trade Scalper. Notice how price is touching the profit target. Price needs to pass through the target to ensure a fill. Within a few seconds, John Paul makes three ticks of profit.
Learn the ATO strategy and many more price action methods by taking part in the next Group Mentorship. Group Mentorship begins Sep. 7, 2016. All courses and software are included. Click here to secure your seat. With your deposit, we will send you the ATO course and software, so you can get started right away.
We’ve had some slow activity in the markets lately. If conditions are too slow, it’s difficult to find trades. On daily charts, you will often see cycles consisting of groups of candles in tight ranges followed by sharp break outs. In this webinar, John Paul covers how to handle this behavior. If recent days have been slow, assume more of the same. If the market begins to stall, then a change in direction may soon occur. You can get a better picture of daily activity by switching to a daily or monthly chart. If a day has a large range range, there’s a chance the following day will trend.
What about intraday? At about 7:50 into the Part 1 video, John Paul explains the concept behind the ATO (At the Open Strategy). When a market first opens, there is often a push in one direction (up or down). Being able to recognize the direction and using it to take profit is the basis of the ATO. If you take the European or Australian market open and match up the times in the E-mini, you can often see the market pushing in one direction at these times as well. After the direction is determined, is there a way to get a better entry price? Markets love to test where they’ve already been. Wait for the retest to occur. Even though the ATO will plot signals in the afternoon, only consider trades in the first 2.5 hours. If no signals generate by noon, then there were simply no trades for the beginning push of the day.
At about 28 min. into the first part, you can see two ATO trades that at first look, would have not worked out. Sometimes, you can get a signal, but no fill. This means the market is too strong to the upside or downside. This setup here is called Chase the Trade – it’s an additional long or short available if the original fill does not occur. Chase the Trade trades are placed as stop with limit orders (middle mouse button). Then it’s a matter of waiting until price hopefully goes in your favor.
In Part 2, John Paul discusses using the ATO on the Euro (6E), front-running trades, MIT orders, scalping, and more.