We’ve posted about the predictive/forecast method called the January Effect for a number of years. Now that we’re at the end of January 2020, we can soon look to use this long-term, historical method to predict if price will ascend to new heights by the end of 2020. This information is useful for futures, options, currency, and stock traders.

To summarize how the January Effect works, we look at the E-mini S&P 500 price value at the start of the 2020 (January 2, 2020). We compare the value with price on the last day of trading for the month, January 31, 2020. If the later price is higher, we say the January Effect has predicted that 2020 will be an “up year.” By “up year,” we mean that in December 2020, the E-mini (and other important market derivatives/measures) will close higher for the year than the closing price in January 2020. To put it simply, if January was an up month, we expect 2020 to be an up year overall. That said, there are no guarantees the January Effect will be correct. However, we have found it useful for identifying long-term breakout buy/long opportunities as we have chronicled in past videos.

As discussed in this video, price is currently near levels in early January. There are a few days left in the month. Watch how price performs on January 31, 2020 to see if 2020 is considered an up year. If price closes lower, we will say that there is no January Effect in play for 2020. Yes, the year may actually end up higher, we just don’t have the historical benefit/indication of the January Effect.

Based on the Jan. Effect, when should one buy? We wait for price to break previous highs. This may include swing trading. We also wait for a four-day retracement. Please watch the video to get a better sense of how this free trading method works. The explanation of placing trades related to the January Effect begins around 4:00 in the video. To better understand how this all works, use 2019 as an example, as John Paul did. Also, you can configure NinjaTrader’s Fibonacci tool to show horizontal lines for 0%, 50%, and 100% of a drawn distance, which is a good visual aid to identify areas to place trades.

Get the Trade Scalper signals on your chart today!

At the start of the video, take a look at the two nice Trade Scalper signals using a 2-Range chart with NinjaTrader. On a 2-Range chart, each bar (aka candle) represents 2 ticks of ranging price activity over time (however long it takes to plot each bar based on volatility). At around 2:42, the later trade results in a four tick (1 point) win.

When scalping, timing is important, but always have a profit target and stop in mind. We use NinjaTrader’s ATM Strategy feature to predefine these values. This way, when we place an order on the DOM, we have a premade ATM Strategy selected so we don’t have to fiddle with values when fast entry is important. For this Trade Scalper method, we’ll tell you what values to use for ATM Strategies, etc.

Once you’re in a trade, try to refrain from moving your profit target and stop loss values. Doing so will put you “at the back of the line,” essentially. Orders are to be processed first-come, first-served. Also, avoid using stops > 2x your profit target. It’s probably too much risk and a sudden unfavorable move can greatly impact your trading account. Too small of a stop loss is also a problem because “normal” market movement can stop you out prematurely.

Scalping is a great way to minimize your time in a position. Trading always involves risk, so the less time you spend with an open trade, the less risk. We often recommend our Trade Scalper method for this reason. The strategy is “in and out” whenever price action says, “there’s a trade here.”

Visit our trading courses page to compare the Atlas Line and Trade Scalper or purchase both so you can trade like John Paul, here.

Let’s put two charts side-by-side: the Atlas Line on the left and the Trade Scalper on the right. As you can see, the Trade Scalper chart on the right already has a signal (in purple). No signals appear yet for the Atlas Line. The reason why we’re showing both systems is that many traders prefer combining these methods. The Atlas Line is good for signals and providing an overall direction of expected price activity. Using that information, you can confirm (i.e. get a second opinion for) Trade Scalper trades.

At about 2:00 in, you’ll hear a doorbell sound that corresponds with an Atlas Line Long signal. The buy (long) signal occurs when price is at 3305.25. The idea is to quickly place a trade according to the signal. John Paul believes the anticipated upward price climb (based on the Atlas Line signal) also matches up with a retracement, whereby price climbs back up to test prior highs.

Remember the market has a different attitude or behavior depending on volatility. Over time, you may notice a certain personality emerge during slow activity and also when fast. We adjust our profit target and stop-loss values based on current market conditions. This means we want to trade based on realistic values that we believe the market can “afford” to give us.

Jump to 5:25 and you’ll see a Trade Scalper signal. We have the indicator also set up to use the doorbell sound. The Trade Scalper goes for more trades but of lesser value (three to four ticks on average) as compared to the Atlas Line. The Atlas Line, in comparison, may produce a couple of primary Dbl Bar Long or Short signals per day on average.

If you want to get the same signals, purchase the Trade Scalper here.

Could you afford your lifestyle by trading two to three times a day only? Or is it better to take a dozen trades just because your trading system says so What time of day is best or how can we filter losing trades for better results?

These are questions you probably asked yourself if you’ve been day trading or practicing for some time. Firstly, avoid closing time or the afternoon where the market can behave more erratically than normal or become too slow. Note that the chart time in the video is US/Eastern (EST). Also, consider incorporating a time-based stop. No matter what, if a certain amount of time has passed, be ready to get yourself out of the trade. Hanging in a trade for too long out of desperation or misplaced confidence can be an expensive play. Take advantage of NinjaTrader’s ATM STrategy feature so your predefined stop loss and profit target value(s) are automatically used. And no, you should not take every trade that your system/indicator produces. Typically, trading systems will continue to produce signals in less than optimal conditions. This is where your training comes in, or at least if you’re one of our clients.

Jump to 58 seconds into the video to see four consecutive winning Trade Scalper signals. And then around 2:00, see the fifth Trade Scalper trade of the day for demonstration purposes. Keep in mind, you may not want to trade five times per day. If you have success and made a decent profit with the first couple of trades, it may be better to minimize risk and walk away with your wins. At 3:17, you’ll see the sixth trade of the day. Yes, there was still time to trade (slow afternoon conditions had not yet occurred). Again, you may not want to take that many trades.

In day trading, other than the pursuit of making money, the one thing that confounds traders the most is order placement. Placing orders is a requirement for day trading. A person places a buy or sell order with the hopes of making money. Sounds easy, right? Well, there are different types of orders and each one behaves differently. You should know what’s available to you. For example, some order types may work best for some situations and not others. In this video, we’ll teach you about the differences and use.

What are the different order types? Discussed in the video, you have market orders, limit orders, MIT orders, stop orders, and stop limit (also called stop with limit) orders. Depending on your trading platform, you may have all or some of those order types available to use with buying or selling.

Sometimes, you may want to get into a position (aka get into a trade) at a given moment. A market order will do this. It’s probably the easiest to understand. Essentially, you get into a trade wherever the price is soon (almost instantly) after clicking the Market button in either the Buy or Sell column of the NinjaTrader SuperDOM (pictured in the video on the right side of the screen).

In other cases, you may want to get into a trade when price reaches a certain value or one more favorable. This can be accomplished with a limit or MIT order as explained at 3:40 in the video. Please take a moment to watch the full 15 minutes, as it could save you time and potentially money (in case you could be using more appropriate order types for your style of trading).