John Paul shows how the short entry signal is displayed for the Atlas Line. In this case, we are waiting for two closing candles below the dashed pink line (Atlas Line). When the second candle closes, red text appears indicating to the trader that it’s time to sell the market (a short trade). You can see how we’re waiting for price to trigger our entry. This is essential what price action trading is all about. Using a price action strategy, you can determine when to enter, and what your profit target and stop loss should be. The entry, profit target, and stop loss are the three primary positions you have to consider for each trade. As with any trading method, price action does have losing trades. The long trade earlier on June 17, 2013 resulted in a small loss or break-even trade. It’s important to consider broker fees and periods of time greater than 30 days when gauging the success of a trading system.
The trade in this video occurred in the afternoon. Typically, John Paul only trades the US/Eastern morning period, from 9:30 a.m. to noon. The Atlas Line can provide evening trades as well for the Globex market. For trading futures currencies like the 6E (Euro FX), you can set the Atlas Line to work with the 3:00 a.m. US/eastern equivalent of the European market open.
After you enter a trade, you are waiting until your profit target or stop loss gets hit. If the profit target is not hit, you have to get out at either a smaller profit, break even, or loss. At 2:56 in the video, John Paul explains a few of the stop strategies. He advises taking whatever stop loss comes first. The profit targets are based on the Average True Range (ATR) with a value of four. By rounding the current ATR value down, you can determine what the profit target should be. This allows you to keep your profit expectations a reasonable distance from the entry.
At about 5:30 into the video, you can see John Paul enter a live trade in front of the attendees. The Atlas Line said to go long at 10:00 a.m. Using his live account, he bought the market at 1630.50. The ATR was at 3.48, so John Paul’s profit target was three points (by rounding down). His stop loss was five points (also based on real-time market conditions). You can see how he drags the profit target and stop loss around on the NinjaTrader DOM window. You can also do this on the chart using the Chart Trader feature. The green profit target and stop loss lines get automatically placed on the chart because of the ATM Strategy John Paul has in place. The ATM strategy did not fit the real-time market conditions, so he had to re-position them. By 11:00 into the video, the trade is over with John Paul making 3 points of profit. Even if you were trading one contract, that’s a profit of $150 without broker fees. John Paul was trading 10 contracts, so the trade was worth $1500.
Here are some of the answered questions and statements asked by attendees:
Mike: Would you have a short sitting below that price for a break out to take you in the market?
TA: are your decisions only n 5 min charts?
Mike: Your profit target is the previous highs. Would you adjust the targets or leave them no matter what?
Frank: can you please explain the entry process?
Mike: If there was news at 10:00 would you wait until after the news?
Tom: are your posted results taken from the room?
tony: new to this ..so what is your profit so far
Dean: Do you recommend starting out on the 5 minute chart?
Will: you get another Atlas line today, or will you use this one all day?
NJ: How far away from ATR would you enter as your prove-it-stop may be too big?
Dean: How does the Atlas line handle ranging markets?
Dean: Very stringent rules based trading. I like. Instills discipline win or lose.
Some of the attendees were John Paul’s Mentorship students. Here’s what they had to say:
Najam: i took the trae 4 contracts
Guess: i took it with 5 contracts
Chris 2: Been using your ATO successfully for last 2+ years. Thanks
Chris 2:You are one of the MOST Honest Trading Instructors I’ve encountered and it works!!!
dick: To all who are contemplating signing up for J Pauls mentorship I would encourage you to enroll. I’m 75 yrs young and this is the best systems I had experienced.
On June 3, 2013, the Atlas Line produced a Short signal around 11:00 a.m. Note that the actual text for the Atlas Line always plots a few bars back from the actual entry. So the price and time for the entry is really 1626 because you enter when there are two candles closing above or below the Atlas Line. John Paul draws an arrow showing the point of entry at about 28 seconds into the video. See the Long signal at 1632 as a comparison. Yes, the Atlas Line gives you exact entries so you know when to “buy the market.” This portion of calculating the entries is automated. You have to manually position the profit target and stop loss according to the rules John Paul teaches you during the client-only training.
While buying the market at the entry price (aka placing the order), you’ll notice the ATR (Average True Range) value can be rounded to 3.25. This 3.25 is our profit target – 3.25 points – the amount we’re hoping to profit from on this trade. We know exactly how much to go for based on what the current market conditions can produce. We use an ATR with a period value of four for this calculation. The E-mini has been more volatile as of late, allowing for bigger moves. It’s a nice change considering the relatively slow conditions of previous months.
If you do the math, 1 tick on the ES is worth $12.50 USD. Four points are in a tick. On the ES, a profit of 3.25 points is $162.50 while trading one contract. If you trade two contracts, that’s $325.00 on this one trade, excluding the broker round-turn fee, which would probably be around $9.00 for two contracts. Not bad! And according to John Paul, the previous trade in the video would have also been a winner.
NinjaTrader sponsored John Paul’s price action webinar yesterday. John Paul begins the hour-long webinar by talking about one of our old courses, the ATO (At the Open). Now only available in the Mentorship Program, the ATO teaches you how to trade the opening move in the E-mini S&P. This exact price pattern occurs on a regular basis. By applying objective rules, you can learn to take advantage of this pattern every day.
Next, John Paul says why he doesn’t like to use traditional indicators – fibs, moving averages, MACDs, etc. These indicators usually require optimization because the market is always evolving. If you don’t optimize, you are stuck with old settings for a market that no longer behaves the way the indicator anticipates. The Atlas Line is indeed software for NinjaTrader, TradeStation and eSignal. Unlike other indicators, the Atlas Line only needs to be configured for the user’s local time zone. No ongoing updates are provided, nor does the user experience lag associated with traditional indicators.
At about 8:00, John Paul gives us an update on the January Effect on how it has played out so far. The January Effect says 2013 is expected to close higher (in December, 2013) than the price the price it closed at in the end of January, 2013. Since an overall trend is determined, John Paul is able to recognize a breakout strategy you can use for holding positions longer than a day or two. We get many questions from traders who hold positions overnight or swing trade – this is what you’re looking for. The strategy is described starting at about 10:00.
At 23:00, you can get an understanding of what the ATR (Average True Range) is. Even with long term positions, traders can use it to determine profit targets and stop losses.
At 37:00, John Paul transitions into the Atlas Line, explaining its trades and the Strength and Pullback signals.
At 43:00, John Paul explains the difference between the two scalping methods offered – The Trade Scalper and Price Action Scalping. Price Action Scalping is only offered in the Mentorship Program (begins May 1, 2013). He also covers chart setup with the NinjaTrader Dynamic SuperDOM. Remember that he can’t describe the full method it its entirety – just the basics are mentioned.
At 55:00, John Paul explains the market news page. We’ve posted about it before. Use the calendar to see upcoming financial news for the week. The closest news event is highlighted. On the top of the page, real-time market news is shown. Just refresh the page every week.
Najam from New Jersey was a struggling trader who traded on and off for about a year. During his struggle, he was following moving averages, cycles, momentum, etc. He was not sure when to enter the trade and when to exit. He then found Day Trade to Win and signed up for the eight-week Mentorship Program. By learning the many price action methods John Paul teaches, Najam has all the answers he needs. Najam’s favorite trading methods he learned is the Roadmap, Atlas Line and X-5 trade.
“John Paul is an amazing teacher. You can ask him any question and he will explain it over and over until you get it. His method of trading is price action.”
He recommends this course to anyone who wants to improve their trading results. He commends John Paul and the Day Trade to Win staff for reliable help and service.
Included with the eight week Mentorship Program:
• Eight weeks in duration taught live by John Paul.
• Focuses on the E-mini and other popular futures and currencies
• Includes all software and courses (Atlas Line, ATO, Roadmap Trade, Blueprint Trade (Power Price Action method), X-5 Trade, Price Action Scalping, the Trade Scalper, Filtering Trades, Trading the News and much more).
• All classes are recorded and any class after the eight weeks is free. You can play back your videos at any time in the future and watch the lessons.
• Via email, John is also able to answer your trading questions about the Mentorship methods whenever you have them
• We also offer remote assistance to completely set you up with everything that you need.
• Our methods are based on experience and knowledge used by floor traders. Our focus is consistent profitability using only price action.
Last week, John Paul took a look at the E-mini S&P and the Atlas Line. He scrolled through four days of history, showing the many signals produced by the software. You can see more recent trades here. The idea of the Atlas Line is to provide you an exact entry and an overall direction of whether you should be long or short. When price is above the plotted Atlas Line line, go long. When below, go short. It’s a simple way of thinking.
You might be wondering how the Long and Short signals are produced. There needs to be two closing candles above the Atlas Line for a long signal. Similarly, two closing candles below the plotted line will produce a Short signal.
Sometimes, it can be a bit tricky to decide when / where the entry is. The Atlas Line has a BarsBack parameter that lets you specify how far back the order signal plots. If you zoom in on your chart and take the BarsBack into account, you’ll know exactly what candle the entry corresponds to. Alternatively, just look for the two closing candles above or below.
For your stop losses, there are a few different strategies. We take whatever comes first. (In case you’re new to trading – you are hoping your profit target is hit. The stop loss is what’s hit when price does not go in your favor -it’s a safety net.) The prove-it stop occurs when price closes on the opposite side of the line. The time-based stop occurs when 20 minutes have passed (four bars on a five minute chart). No need to hold the trade longer than that – get out at the current price. And the catastrophic stop is the big safety net – in case the market unexpectedly and sharply rises or falls in a short time frame. All of the stops are covered in detail during the hour-or-so long live training that’s included with purchase.
Watch this video to learn a great forecasting technique. It will help you determine whether the day will be trending (heading in one direction for the most part) or whipsaw (full of choppy, difficult to trade, back and forth activity).
The E-mini S&P 500 (ES) experienced a trending day on February 27, 2013. At 1:17 in the video, you can see how price slowly climbed throughout the day. If you can know in advance whether the day will trend or not, your trading can greatly improve. The technique in this video works for many market opens, but the 9:30 a.m. US/Eastern market open is used. John Paul demonstrates how to split the trading day into three separate sections (A, B and C) at distinct times. Each section has its own characteristics as discussed at 3:40. The method – what to do with the A, B and C sections, is explained at around 5:20. In short, section A can tell you with reasonable certainty whether or not the day will trend. Using the ATR, you can position your profit target and stop loss. You will need to wait for price to prove where it wants to go – either two consecutive closes above or below the previous range. At 9:28 in the video, see what the Atlas Line produced for orders. Visit our videos page to see more videos or the Atlas Line page to see software that works for trading trends.
On January 23, 2013 trading the E-mini S&P 500, the Atlas Line produced a successful Long trade at 1488. This first trade was good for one point according to the market’s ATR (Average True Range). Profit targets are always based on the ATR. This type of dynamic stop reduces risk and makes your profit target match was the market is expected to be able to produce. John Paul has his “BarsBack” Atlas Line parameter set quite high, so you see the entry signals a few bars to the left of the entry candle / signal. You can see how this setting applies with the Short trade at 1486.50. This video shows the trade occurring live, with a profit target of 1.25 points. The best time to trade the Atlas Line is the morning (US/Eastern), but you can trade it on nearly and market that trades 24 hours a day with reasonable volatility. Trading is simple and objective when you have your profit targets and stops known in advance.
1. Have an entry and exit plan Knowing when to get in, when to get out, and what to do if the trade fails is extremely important. In other words, have an entry strategy, profit target and stop loss.
2. Avoid the first 15 minutes when a market opens This period of time is usually highly volatile – automated systems, premarket trades and unfounded trades produce choppy price action. You are better off waiting until it levels out and using the ATO (At the Open) Strategy taught in the Mentorship Program.
3. Understand market orders vs. limit orders Market orders tell your broker to buy or sell at the best available price. Limit orders let you control the maximum and minimum prices at which you will buy and sell. Limit orders are better because you have more control and can be used more easily with strategies.
4. Avoid margin risk The whole point of trading using a margin is to increase the amount of potential returns on each trade. Leveraging more money puts you at risk so keep your margins in check. Trade with a 4:1 intraday margin, if possible.
5. Don’t guess or follow instincts Always have a strategy. You need to know objectively what conditions will trigger your entry. And these conditions have to be consistently successful.
6. Keep a log of your trading activity Your trading software can keep track of your profit and loss performance. You should keep track of your personal development as a trader – improve upon your mistakes. The paper remembers better than the mind.
7. Paper / sim trade first Practice makes perfect. Paper trading with a live data feed will simulate the experience of live trading as closely as possible without spending real money. Paper trade for as long as you need to before going live.
8. Be wary of where your trading advice comes from The markets are inherently unpredictable for the most part. In the business of trading, there are many who are a little too confident. Do your research before putting anyone’s advice to the test.
9. Control your losses When trading with real funds, only trade with money you can afford to lose. If trading ever gets you into financial trouble, take a break and refine your strategy by paper trading with live data.
10. Allow yourself enough time to learn A baby needs to crawl before being able to walk. Don’t panic at the first hint of loss and throw your strategies out the window. Trading is emotional. Know that you will have losing trades. Being consistent requires discipline with the right, objective trading methods. See our courses to find out more.
Significant news this week regarding for traders of the E-Mini S&P 500 (ES), YM (Mini-sized Dow), NQ (E-Mini NASDAQ-100) and EMD (E-Mini S&P MidCap 400) – as of Sunday, November 18, 2012 the close of the CME Globex for electronically traded equity index futures contracts will change from 4:15 p.m. US/Eastern to 5:15 p.m. US/Eastern. Your broker will most likely cancel any orders you have that are not filled by 5:15 p.m. US/Eastern. This time change will affect your day trading starting Monday, November 19.
• There will be a 15-minute halt in electronic trading from 4:15 p.m. to 4:30 p.m. US/Eastern
• Trading for equity index contracts listed on CME Globex will resume at 4:30 p.m. US/Eastern for the same trade date for 45 minutes, closing at 5:15 p.m. US/Eastern. This includes Fridays, meaning that the end of the trading week on CME Globex also will be changed to 5:15 p.m. US/Eastern
• CME Globex trades that take place during the 4:30 p.m. – 5:15 p.m. US/Eastern time frame will be subject to the daily settlement prices calculated at 4:15 p.m. US/Eastern (i.e., settlement times will not change).
• Trading of equity index contracts on CME Globex will be closed from 5:15 p.m. – 6:00 p.m. US/Eastern.
• Trading re-opens at 6:00 p.m. US/Eastern on CME Globex (Sundays-Thursdays) for the new trade date.
These changes to CME Globex hours coincide with the implementation of daily price limits on equity index contracts (switching from quarterly price limits, pending regulatory review). Daily price limits will be applied each day starting at 6:00 p.m. US/Eastern. The changes are designed to harmonize CME products with the underlying markets at U.S. stock exchanges, which will adopt daily price limits on February 4, 2013, in accordance with updated market-wide circuit breaker rules.
• Trading re-opens at 6:00 p.m. US/Eastern on CME Globex (Sundays-Thursdays) for the new trade date.
• The Reference price for daily price limits for the next trade date will be calculated based on the 4:00 p.m. US/Eastern futures prices.
• The width of the equity index futures price limit band will be based on the underlying cash equity index.
• The daily limits will be published on the CME Group website prior to the CME Globex open at 6:00 p.m. US/Eastern.
• CME Globex trading hour changes are effective for both U.S. and international equity index futures and options.
When reading the announcement from the CME website, note that the time zone in use is Central Time (CT). This is an hour behind us here in Florida (Eastern Time / ET).
What does this all mean for you?We do not foresee an impact to any of our Day Trade to Win strategies or methods. John Paul indicates that he is unsure if there will be significantly tradeable volatility during the extending electronic trading hour. You may want to stay away from trading during this time at first. Going forward, it will be interesting to see how an expansion in trading time impacts the markets.
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.
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