What type of trader are you? I was asked this question recently and the first answer that came to mind was “I’m a setup trader.” Now this phrase may be confusing, but it really explains how I look at trading the markets. I teach traders how to identify specific setups in order to validate trades. If the setup validates, then we enter the market. Price has to prove itself in an exact pattern before we consider taking an exact trade with exact rules. How we proceed to manage the trade is equally important. At any given moment, I’m watching price as it plots to see if the pattern matches the rules of the Roadmap Trade, Blueprint Trade, Atlas Line, or any other of my price action trading methods. By having a how, when and why behind each trade, we’re much better off.
Those of you joining me for the next eight week Private Mentorship Program starting on March 22, 2012 will learn 11 unique methods of trading price action. By looking at my live charts during each training session, spotting these setups will become second nature. The first week of training discusses the ATO (At the Open), and like all other courses offered on Day Trade to Win, is included and taught in full detail. Another method learned in later weeks is the Roadmap Trade (available only in Private Mentorship). The Roadmap shows exactly where market manipulation occurs and therefore provides a filtering strategy that works with all other methods in the Mentorship Program.
Most of you who follow my blog know that I consider to price action as the best way to trade. I also bring to light how the markets are artificially manipulated in one way or another. In the Private Mentorship Program, I demonstrate a way to capitalize on this manipulation – the “RoadMap Trade.” It’s fascinating how the markets are purposely adjusted daily. For those of you trading Gold Futures (GC) using the Atlas Line and/or the Power Price Action method, you should know about Gold Fixing.
Firstly, let’s define what the Gold Fix is. Twice each trading day at 10:30 a.m. and 3:00 p.m. London time, five members of The London Gold Market Fixing Ltd meet via telephone conference to decide the price of gold. These decisions are meant to settle contracts in the London bullion market; however, the implications reach further. The result is a benchmark of gold value used by the world’s financial institutions, markets, mining companies and jewelry retailers. The second fixing of the day at 3:00 p.m. was instituted in 1968 to coincide with the open of U.S. markets. Formerly overseen and conducted by N M Rothschild & Sons, Barclays Capital is the current authority on gold prices. You may recall Barclays Capital as the company that acquired Lehman Brothers’ main U.S. division in 2008. The process to “fix” gold requires each of the five London Gold Market Fixing Ltd members (representing banks) to decide on a single value for the net amount of gold they wish to buy or sell. This value is based on the amount of buy stop and sell stop orders each bank has (proprietary trading) and those placed by clients (brokerages). Once each member has stated a value, the group determines whether a net value of 0 has been reached. If not, the process iterates, with each member adjusting orders. The goal is to reach zero summation. Buyers are charged 20 cents per troy ounce as a premium to fund the fix process; inducing bid-offer spread.
Here’s how the Gold Fix affects you as a trader:
• No one knows what the exact gold fix will be until it is declared by the chairperson. Before this occurs, each member bank representing its own interests and those of clients, plays a high-stakes game of “spoof.” Each bank wants to play its best hand at declaring itself as a buyer or seller depending on the adjusted price at each round (iteration).
• When the decided value is an upward adjustment and exceeds buy limit orders, the limits are hit and demand is reduced. Conversely, when sell orders are reached under an increased decided value, supply is increased. The exact opposite occurs with downward adjustments.
• Speculative traders trade this activity by buying under their limit or selling above it. Note that trading the actual fix is near impossible for private traders, as the settlement condition (London Good Delivery Bar) at 400 ounces is too expensive.
• Purchasers can miss market moves because they have to wait until the fix value is announced to determine how much bullion is worth.
• The five members never release official data regarding how fixes are reached.
Is it surprising that markets are manipulated with things out of your control? As a trader, you should be aware of it – not everything is fair and balanced. If you’re using indicators, you’ll likely be a victim of this type of “fixing” due to a strict, algorithmic approach. Instead, by using price action, you can achieve better results. Our Power Price Action and Atlas Line methods are perfect for identifying trade opportunities in the highly speculative Gold Futures (GC) market.
In case you missed it, here is yesterday’s price action webinar. With many traders in attendance, John shared his live NinjaTrader charts while explaining how the Atlas Line software works. For those of you who are new to Day Trade to Win, the Atlas Line is software that plots a line on your charts and provides exact entry prices and direction (Short or Long) across the most popular futures and currencies. When you have an accurate system that provides the direction to trade along with the time / price to enter, trading becomes much more enjoyable.
Remember, the Atlas Line is included and taught in the Private Mentorship Program. Also, everything else we teach is included to assist with filtering and recognizing opportunities. A new session of Private Mentorship begins this coming Thursday (March 15). Don’t be idle at the Ides – register your seat and change your trading around!
The Atlas Line plotted a Short signal for the CL (Light Sweet Crude), 6E (Euro) and GC (Gold Futures) charts as shown. Providing you took the live trade according to the profit target rules, you would have made out nicely.
Also, if you’re looking for tips on how to trade those unpredictable news events, John explains a plan of action at around the 2:30 mark.
Because yesterday was contract rollover day for CME futures, you’ll also see how to switch to the new contract period. Although this may be common knowledge among professionals, some basic information is provided at around 16:10.
In the E-Mini (ES), a Long entry was given at the price of 1363. This would have also been a nice trade.
At around the 29:00 mark, John explains how to read the ATR across multiple markets. This is important because the value he and others quote involves decimal position moving, particularly when addressing the Euro as compared to the E-Mini.
Here’s a trading video showing today’s Atlas Line short trade. Prepare to be held in suspense – the outcome is shown at the end of the video. In between, John describes three consecutive days trading the E-Mini S&P using the Atlas Line software. You’ll also hear John identify Strength and Pullback trades. These unique setups are taught in the included live training along with stop strategies. Remember, the Atlas Line will plot on your charts just as you see it here, so there’s no second guessing your entry price. If you make it through to the video’s end, you’ll see a candle tag the profit target, eventually hitting for +1.75 points.
Traders – you should already know what today (March 8, 2012) is. Contract rollover day! Yes, this is the day when we (traders of equity futures contracts) switch to the next contract session – in this case, June. We always roll over the first or second Thursday or Friday of the expiring contract month. These expiration months are March, June, September and December. Your day trading platform may automatically warn you of the rollover. Why is it important that you roll over the contract? Well, you can’t trade an expired contract. Also, follow the volume and liquidity.
Here are some instructions on how to roll over a contract to the new contract session in NinjaTrader:
1. Navigate to NinjaTrader’s Control Center > Tools > Instrument Manager
2. Find the expired contract in the left panel and select it > click the right arrow button (>) to remove the expired contract
3. Find the new contract for your market / instrument of choice in the right panel and select it > click the left arrow button (<) to add the new contract to the instruments list
4. In your charts, remember to change to the new contract.
This applies to CME markets like the ES, 6A, 6E, etc. Note that NinjaTrader behaves inconsistently when changing to the new contracts - the ES automatically jumps to 6-12, but for currency futures, you will manually have to select 6-12 for each of them.
Here’s a video of a live trade John took yesterday on the E-Mini using the Atlas Line. Note that the trade setup in use is called a Pullback, the rules of which are taught in the live training that’s included with purchase. John uses the ATR (Average True Range) to indicate the profit target and stop strategy. This is the most responsible (and accurate) way to trade – based on what real-time market conditions can produce. As you’re probably aware, the E-Mini has been very slow lately so he’s only going for one point (according to the ATR). Many of our students also took the previous short, as indicated by the Atlas Line’s red printed text. You can trade the E-Mini and other markets just like we do – the Atlas Line is available as a six month or lifetime license.
In a live webinar or recording, you’ve probably heard John Paul discuss the importance of synchronizing your Windows clock with official time servers. Why is this important? Your data feed may use native time stamping, and if your Windows clock is off by only a small amount, NinjaTrader will display information differently. This applies to both real-time and historical data.
It’s best explained by NinjaTrader support rep. Matthew…
“You can also keep an eye on any discrepancies in real-time by first opening a Time and Sales window and comparing the real-time time stamps to your local PC clock. You will want to compare this down to the second. Note: this would only be true if your data provider offers native time stamping.”
We recommend the fix below regardless of whether your data feed is native or not. You could switch data feeds a month from now and forget about the importance of synchronicity.
What’s the best/easiest solution?
We recommend a free program called Karen’s Time Sync. The download link is below the screenshot image on the KTS site. Using the Auto Sync feature, KTS will automatically synchronize your Windows clock with ultra-precise official time servers in your time zone. Using the program is easy – select a server in your time zone, click Sync Now, optionally check “Automatically sync my clock…”. You should then see a report at the bottom indicating the success of the sync. If an error occurs or a connection cannot be established, find a new server in your area and try again. Once you find a server that works, jump over to the Settings tab and configure KTS to launch when Windows starts. We also recommended checking “Sync My Clock When This Program is Automatically Launched” and also checking “Then Exit This Program”.
Synchronizing your clock may also improve your experience with other trading platforms such as TradeStation and eSignal.
The E-Mini S&P is a great market to trade – unless it’s slow. Well, it’s been slow. There are numerous videos that I’ve created detailing when to just say NO to trading the E-Mini under undesirable conditions.
What is considered slow? I use a 5-Min chart in conjunction with the ATR (Average True Range) set to a 4-5 period. Refer to my previous blog post / video to find out more. If the ATR value is below 1 on the E-Mini, consider it dead and not worth trading. The dojis will come out and play along with the whipsaws. No one is trading and neither should you.
If the E-Mini just isn’t cutting it, then what do we do? Take a look at other markets. Here are a few of my personal favorite alternatives to the E-Mini. Utilize them to diversify your trading:
Euro Currency (6E) – $12.50 per tick increment Australian Currency (6A) – $12.50 per tick increment Swiss Frank Currency (6S) – $12.50 per tick increment Canadian Dollar (6C) – $10 per tick increment
What are the best times to trade? This depends on when the exchange opens for the market you wish to trade.
3:00 a.m. US/Eastern Time is when the Liffe exchange opens
9:30 a.m. US/Eastern is when the U.S. indices markets open
On currencies, the ATR works a bit differently, being denote in ticks instead of points. For currencies, again use a 5-Min chart with a period setting of 4-5. To determine tradeability, perform a simple mental calculation by moving the decimal point over four places to the right to know how many ticks the market can handle and what you can expect. As an example, 0.00080 is the equivalent of 8 ticks or 2 points. Anything below 5 ticks on the currencies is a dead market.
I also like the Soybean market and Treasury Notes as alternatives to the E-Mini S&P.
If you’re a beginner, I recommend avoiding energies like crude oil and natural gas.
Remember, you can use the Atlas Line, Trade Scalper and Power Price Action methods in these other markets. In the Private Mentorship Program (new group session begins Monday, Feb. 13), we discuss these markets in detail and how to tackle them on a day-by-day basis. Click here to find out more or register.
Today, the U.S. House of Representatives passed a bill, the STOCK (Stop Trading on Congressional Knowledge) Act, to curb Congressional insider trading. Vote results indicate 417 Congress members in favor of the bill and two in opposition. This House version differs from that of the Senate, which includes provisions for financial data collectors to disclose their activities like lobbyists. Regarding the differences between both bills, critics claim the House version has “caved in to investment firms” with its exclusion of said provisions.
A political intelligence industry exists to monitor and sell data based on the financial activity of government officials. House Representatives have expressed concern that this “watered-down” version of the bill does not regulate the communication or financial exchanges between these industry members and government officials. Wall Street lobbyists have been accused of leading the “watering.” Nevertheless, both House Democrats and Republicans overwhelmingly support the bill, including the President’s stated endorsement.
The creation of the STOCK Act may have been the result of the CBS “60 Minutes” investigation that implicated that lawmakers enriched themselves based on information obtained through their official duties. Even without the bill being passed, members of Congress are by no means above the law when it comes to insider trading. Members of Congress face the same penalties as regular investors who attempt insider trading. For the last seven years, there have been no recent insider trading charges brought to Congressional delegates.
What do you think?
• Are you in favor of the legislation banning insider trading?
• If so, what should the penalty be for insider trading?
• If not, do you think government officials’ investments should be kept entirely private?
• If the investments of Congress members become free public information, how can an industry that sells this data exist? Does this imply a relationship of “shadiness” between these data miners and government officials?
John Paul once again proves that successful day trading can be easy. The video starts with showing you how to take advantage of the large bullish news event candle at around 8:30 a.m. US/Eastern. A common mistake is made when trying to interpret the news as either positive or negative, then entering based on your judgement. John shows a specific technique where the market can be used to provide direction AFTER the big move, when price movement becomes easier to predict. To keep track of news events, visit the Bloomberg Economic Calendar and note the red star announcements.
Another technique John discuss is the Yo-Yo effect. Based on buyer / seller exchange principles, this effect occurs when price bounces back and forth in a choppy succession. If you’re looking to enter a trade, this forecasting method will help you avoid problematic conditions. Start watching from around the 26 minute mark if you’re interested.
The final topic John touches on is market predictions for 2012. By the end of the year, John expects indices to climb to levels higher than those reached in January 2012. The pattern used for this prediction can be back-tested many years with a high degree of accuracy, as it’s used by professional market analysts.
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
GOVERNMENT REGULATIONS REQUIRE DISCLOSURE OF THE FACT THAT WHILE THESE METHODS MAY HAVE WORKED IN THE PAST, PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. WHILE THERE IS A POTENTIAL FOR PROFITS THERE IS ALSO A RISK OF LOSS. A LOSS INCURRED IN CONNECTION WITH TRADING FUTURES CONTRACTS CAN BE SIGNIFICANT. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION SINCE ALL SPECULATIVE TRADING IS INHERENTLY RISKY AND SHOULD ONLY BE UNDERTAKEN BY INDIVIDUALS WITH ADEQUATE RISK CAPITAL.
ANY ADVISORY OR SIGNAL GENERATED BY DAY TRADE TO WIN IS PROVIDED FOR EDUCATIONAL PURPOSED ONLY. ANY TRADES PLACED UPON RELIANCE ON WWW.DAYTRADETOWIN.COM SYSTEMS ARE TAKEN AT YOUR OWN RISK FOR YOUR OWN ACCOUNT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. WHILE THERE IS GREAT POTENTIAL FOR REWARD TRADING COMMODITY FUTURES, THERE IS ALSO SUBSTANTIAL RISK OF LOSS IN ALL TRADING. YOU MUST DECIDE YOUR OWN SUITABILITY TO TRADE OR NOT. FUTURES RESULTS CAN NEVER BE GUARANTEED. THIS IS NOT AN OFFER TO BUY OR SELL FUTURES OR COMMODITY INTERESTS.
READ OUR FULL RISK DISCLOSURE AND DISCLAIMER STATEMENT