Today’s E-mini at 9:30 a.m. EST was priced at 1811.75. It ended the day at 1780.25. It was a big down day. This opportunity allows us to show you multiple Strength and Pullback Trades when price is severely trending. The Atlas Line was correct in deciding the market would be going short, as it advised sticking to the short side. You can see our recent trades on this page that show the Atlas Line strategy in action from 9:30 a.m. to noon, EST.
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.
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.
The first part of this live webinar recording explains how to use the Atlas Line to evaluate whether a trade is still viable after big market spikes. By checking if the current plotting Atlas Line position is more than double the ATR, a trader can determine if the market is “exhausted” and not worth trading. If the value is less, the trade is still viable. The Atlas Line’s entry, profit target and stop loss can then be placed according to the rules. At around 7:00 in, John Paul explains what the ATR is and how to configure it. At about 13:00 in, John Paul discusses trade management from the last few days. Again, the profit and stop loss values are taught to you in the live training. However, John Paul goes over them briefly in this video at the 15:00 mark. Fast forward to the 28:00 mark to see a review of this year’s January Effect trading opportunities. The January Effect is sort of a retracement breakout strategy, where there’s an expectation for the market to rise overall for 2013. Each time a previous high value is reached via retracement using a Daily chart, there seems to be consistency with price then rising. According to John Paul, this makes for many good Long (bullish) entries.
In this video, John Paul covers the E-mini market activity almost a month ago where a new high was reached. By examining the behavior of the market on September 18, 2013, we can take better advantage of similar market behavior in the future. The January Effect has shown that for nearly every major pullback and return, once the previous high is broken, trading conditions are optimal for a long trade. Almost always, price “blows” through the previous high, making new highs. By positioning ourselves to go long at the previous high, we can possibly position ourselves for profit.
An example of breaking a new high can be found at 2:50 in the video. An FOMC news event seemingly drives price up, past the previous high. Notice that John Paul points out the previous high occurred in April (he’s using a daily or monthly NinjaTrader chart for these long-range comparisons).
Why does price seem to pattern itself this way? John Paul claims the January Effect is responsible. The January Effect says that because January 2013 closed higher than it opened (on the E-mini S&P), we can also expect the E-mini S&P to close higher (for the year) than its opening price. In previous videos, he has explained that the January Effect is a consistent indicator of price behavior. For a review of the recent year and the previous year, fast forward to 5:05 in the video.
At 6:13 in the video, the bad news of the government shutdown as produced some unusual candles. If price breaks 1725 mark, it may be a good idea to go long. In the last few days, the closest we’ve been to this previous high is 1700.25, so we have quite a ways to go. Certainly, if there is news on the debt ceiling or resolve regarding the government shutdown, be ready as price may take off in a favorable direction.
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.
In this video, John Paul takes a Blueprint Trade, the main strategy taught in the Power Price Action course. Since the strategy is based entirely on price action, only time and price movement are considered for recognizing the entries and calculating the profit target and stop loss. The Bar Timer tool is used to let us know the time remaining in the currently plotting candle. It’s a countdown indicating when the current candle closes. Once the candle closed, John Paul entered the trade long at 1618.75. With NinjaTrader’s Chart Trader enabled and an ATM strategy in place, you can see the profit target and stop loss lines on the chart. The profit target is easy to calculate for this trade. Based on the current ATR (Average True Range) value, it’s two points. The stop loss is at 1615, which is 3.75 points below the entry. John Paul did not expect the stop loss to get hit, but it’s always important to have one in place in case the market suddenly takes off. Sometimes, when stops are too tight, regular market fluctuations can take you out of a trade prematurely when your profit target may have otherwise been reached. There are a few other stop strategies taught in the course such as the prove-it and time-based stops. For this trade, it’s just a matter of waiting for price to move through the profit target. With Power Price Action, there are no Fibonaccis, MACDs, bands, channels, or Market Profile techniques. It’s all price action – the way candles plot on the chart.
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.
On March 18, 2013 the market gapped down overnight due to news in the country of Cypress. Take a look at the E-mini S&P at around midnight, US/Eastern and you’ll see the gap. The news was that the Cypress government is assuming control of its citizens’ financial assets. As one might expect, this created a large, downward move. The bias created was to sell the market. Even though your bias may be to sell the market, it’s still important to take a look at what the price action is saying to us. From midnight onward, price instead made a steady climb to around 1539 at 9:30 a.m. US/Eastern in the E-mini S&P.
The Dbl Bar Long signal was generated at the close of the red candle (1542.75) at 9:55 a.m. US/Eastern. The rest of the day until around 2:30 p.m. This goes to show you that listening to news to get a direction is not always a good strategy. When price intersected the Atlas Line and had two closes below it, a Dbl Bar Short signal was generated at 1545.5. The ATR allowed for a profit of 1.5 to 1.75 with this second trade. At about four minutes into the video, John Paul shows the Euro which had a very strong rally right after the Atlas Line’s long signal. Price action is best tool for helping you decide where the market is headed; especially in conjunction with the Atlas Line.
For all the traders out there this Valentine’s day, we present to you a gift of love! The Get Started Day Trading Guide is entirely free. In just a few pages, you’ll be up and running with the NinjaTrader 7 platform, see live candles plot on your chart, and understand the basics of trading. We highly recommend that you read this, as it covers the most common questions about day trading that we’re asked at Day Trade To Win.
Here’s what’s included:
• NinjaTrader download link and demo license key
• How to set up a paper trading account with NinjaTrader
• Requirements for day trading (computer speed, broker account size, fees, etc.)
• Setting up your charts the way we recommend
• Navigating charts, scrolling through history and the axis
• Understanding price bars and tick increments
• Saving your trading setup
• The best way to begin trading for profit
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.
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.
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