Yesterday, our support team received the following email from Danny in Niagara Falls, Canada. He had some questions for John Paul regarding the ABC method. See Danny’s email and John Paul’s response below.
Thanks for the kind words and glad you are enjoying the videos. I’ll try to put some new ones out soon. See my explanation and chart examples from yesterday.
The ABC Method can be very helpful in both finding entry opportunities and determining whether there’s a trend. In the charts below, US/Eastern time (currently EDT or UTC-4) is used. Remember to adjust if your time zone is different.
With the ABC Method, think about splitting the trading day into three periods. The trading section can begin at the U.S. market open at 9:30 a.m. US/Eastern or the London market open at 3:00 a.m. US/Eastern.
We’ll start with one vertical line at 9:30 US/Eastern followed by another vertical line at 12:00 p.m. US/Eastern. This is a 2.5 hour period. You can consider this a range, as it contains a highest high and lowest low of all data (candles) within 9:30 a.m. to 12:00 p.m. This is the A period.
If within the next (B) period, two 5-min candles close above or below the range of the A period, you can go either Long or Short on the close of the second candle. This must occur within the first 1.5 hours (by 1:30 p.m. US/Eastern) of the B period to be valid. Trending days usually break the A period.
The A Period
The B period begins with the same line you drew at 12:00 p.m. US/Eastern (the end of the A session). Remember to add a new line at 2:30 p.m. US/Eastern to conclude the B period. Yes, the B period is also 2.5 hours in duration.
The B Period
The same relationship occurs when comparing period B and period C for potential late-day rallies and breakouts. The C period needs to show two consecutive 5-min closing candles above or below the B range within the first hour of period C.
The C Period
The same relationship occurs during the London session A period, starting at 3:00 a.m. US/Eastern through 5:30 a.m. US/Eastern (2.5 hours). Then the B period occurs from 5:30 a.m. US/Eastern through 8:00 a.m. US/Eastern (2.5 hours). Then the C period occurs from 8:00 a.m. US/Eastern through 9:30 a.m. US/Eastern (only 1.5 hours).
The London Trading Session
Hopefully this clears up your understanding of the ABC method and how it can work with European markets. Remember that switching your cursor to a crosshair will help you easily identify the times on the time axis. Your profit target and stop loss should be relative to the volatility.
The best way to learn more about the ABC and all of our other trading methods is with our eight-week coaching program called Mentorship. Click here to find out more.
Watch the video above to learn a few handy day trading strategies you can use right away. This hour+ long webinar sponsored by NinjaTrader demonstrates the versatility and effectiveness of price action trading. This video places emphasis on our Power Price Action trading course and why you should be using its methods.
First, John Paul explains why he prefers a 5-minute chart over other time frames, and how the ATR (Average True Range) can be used to dictate profit targets and stop losses. He then explains how this year’s price movement is influenced by the January Effect. John Paul predicts that 2013 will “be an up year” because January 2013 closed higher than the price at which the month.
At about 20 minutes in, John Paul talks about how the markets are manipulated. Big players fake out smaller, retail traders by driving the markets up and down, then causing a sudden reversal in which they truly make profit. In the Power Price Action course, you’ll learn to find indications of manipulation and how to trade it accordingly.
At about 29 minutes, John Paul discusses the Yo-Yo Effect. By locating candles that multiple long wicks (or Yo-Yo bars). Such price bars indicate the market is trying (and failing) to move in a specific direction. A grouping of Yo-Yo bars can be used to place your entries.
• 34:00 – learn how you can use NinjaTrader’s features like the DOM window to better see trading opportunities.
• 45:00 – learn how to spot trends
• 51:00 – how to determine the ATR for futures and currencies, and how to gauge your profit, stop, etc. accordingly
• 54:00 – how to use a news calendar to help your trading
• 1:10:00 – a special limited time offer for the Power Price Action course
As a trader, you are faced with choices every day. Each choice affects your bottom line. Be sure &ndash absolutely sure you know the ‘why’ and ‘when’ before entering each trade. If you are not trading objectively using price action, then you are missing the clear picture.
Attend this informative webinar to see how using price action can provide answers:
• What instruments offer the best bang for the buck?
• What times of the day are best to trade and why?
• Trade management / stop strategies / profit targets
• Configuring your charts (time frames, ticks, data, etc.)
• Day trading methods you can use to maximize profits
• Trading the E-Mini (ES), Euro Currency (6E) and your picks
At Day Trade to Win, we let price tell us how it wants to be traded. We don’t use indicators or outdated information. We trade based on price in real-time. Watch how we trade price action by attending this free webinar. Make 2012 the year you changed your trading for the better!
Here’s a quick example of how to take the guesswork out of trading by using the Atlas Line software. The first trade on Nov. 15 is a Short at 1251.25. This order signal was automatically produced by the Atlas Line based on real-time market conditions. The trade was taken live through NinjaTrader’s DOM, allowing for enough time to capitalize on the reversal, or “bounce” that occurred off the plotted Atlas Line. On November 15th, we logged at least four separate Atlas Line trading opportunities, generating a total of +34 ticks for the day. Be sure to check out our results page to see the details.
As demonstrated, when working with limit orders, it’s important to leave them where they are, as moving the order’s position will send you to the back of the line. Order types, targets along with the three stop strategies (Time-based, Catastrophic and Prove-it) are discussed in the free live training that’s included with purchase. In addition, the training covers the three trade setups that are unique to Atlas Line trading: the Pullback, Strength, and Bounce trades. The Atlas Line is compatible with the latest versions of NinjaTrader, TradeStation and eSignal.
Today’s first Atlas Line trade was Long Pullback with a target of 2.75 points (11 ticks). We entered at 1181.50. After a short time lapse, we were filled at our exact profit target of 1184.25. Yesterday (September 6, 2011), was another great day on the ES (E-Mini S&P futures). Atlas Line users saw several long signals prior to a long, bullish trend that consumed most of the day. This trend allowed for numerous Strength and Pullback trades. If you took advantage of each setup, you probably made an easy 10 points. Determining where to place profit targets, stops, identifying setups, and other tricks of the trade are taught in the live training session that’s included with purchase.
This Friday, we’re having a free webinar where you can come ask questions and observe the Atlas Line plot in real-time. When: Friday, September 9 at 10:00 a.m. US/Eastern. Room Link:http://www.omnovia.com/event/66711315413014
Here you can see John Paul trading 10 contracts live in the Emini S&P. This is a quick, to the point video, so John doesn’t mention right away that he’s using the Power Price Action strategy as taught in the four DVD course. The trade he takes shortly after 11:00 a.m. today is worth 1.5 points, or six ticks of profit, equivalent to $750 when trading ten contracts. Not all traders have 10 contracts (or prefer to trade with this amount), but this profit scales up/down accordingly. In fact, John recommends starting off with simulated trading, then moving upwards in the contract count once comfortable with the method. Needless to say, the trade quickly turns in his favor as indicated by NinjaTrader’s “order filled” chime. John’s busy mentorship schedule doesn’t always allow time to trade the morning session like he prefers, but he saw this setup while teaching and decided to record the trade. The four DVDs, color training workbook and eight weeks of training will confirm your understanding of this proprietary method, including the three stop types and a boatload of other tips for trading futures, currencies and (dare we say) forex.
The Atlas Line called a great short trade on June 6, 2011 worth about 2.25 points, equivalent to $112.50 with a single contract or $1125 for those who trade with 10. Remember that each time you enter long or short, have a reason to do so. The Atlas Line provides a reason for how to day trade, and also provides an indication of the future direction of price. Once the short signal was generated, we knew to stay short because of the blue Line above the candles. An Atlas Line Pullback trade occurred around 10:30 a.m., with a red candle confirming price would drop again.
E-Mini S&P – Atlas Line Trading – June 6, 2011
Remember, we don’t post every time the Atlas Line has a winner – the software has really been on fire the last few months, even more than usual.
A private training webinar (like a mini day trading course) is included with purchase of the Atlas Line. You can learn how to use the software and identify these unique setups. Also, the Atlas Line works with every market: Emini trading, Euro, Russell, Dow, Forex, etc. and is available for NinjaTrader, eSignal and TradeStation.
Yesterday, Private Mentorship students were shown how to take profit in the E-Mini S&P (ES) using an ATO trade. The ATO is one of the 11 price action methods taught in the Private Mentorship Program. This trade was done live, trading-room style in front of course participants. As the students were already taught the ATO, the setup occurred at an ideal time for John Paul to demonstrate how to take the trade.
Notice how the profit target does not change; it’s static.
In the Private Mentorship Program, trades are reviewed in daily sequence, making sure every signal is clearly defined during each training session. Instruction focuses on reading price action; not using indicators or relying on mystical sources. We objectively trade what we see on the charts.
Yesterday, John Paul recorded a video showing how he used the Power Price Action method to snag a 4 tick move in the E-Mini S&P. Notice how is chart is completely free of indicators – that’s because he knows how to enter based on price action (particularly, the Power Price method). The trade setup was objectively identified during a live educational session, allowing for attendees to see how simple it was to capture a few points. The market told him that it was going long, so all that he had to do was place a respective order.
The Power Price Action course consists of 4 DVDs that teach you the method and other price action strategies. You also get 8 weeks of live training with John Paul, where he shows you how to trade the method live. Yes, it works with other indices, Forex, currencies and other markets.
The S&P’s debt rating service projected a poor credit rating for the U.S. today. With this big news, the markets tanked. We pulled up a couple of charts to see how the Atlas Line performed for traders in two separate markets: the E-Mini S&P and Crude Light.
E-Mini S&P (ES) – April 18, 2011
The Atlas Line was spot on in the E-Mini S&P, advising two short orders. The first order was a Double Bar Short, the second, an Atlas Line Pullback Trade. In case you don’t know what a Pullback Trade is, John Paul teaches traders how to identify them in the webinar included with purchase.
Crude Light (CL) – April 18, 2011
Three winning trades. First, a Double Bar Short signal followed by two Pullback trades. When news about the U.S. comes out that is revered with such high importance, there’s a great effect on all markets. We recommend waiting until the news event volatility has subsided before using price action software like the Atlas Line.
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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