On September 16, 2014 the Atlas Line produced a Long entry signal on the E-mini S&P. The Long signal occurred when price was at 1978.50 around 10 a.m. EDT. Based on the ATR, John Paul determined a profit target of about seven ticks was possible. The profit target is always based on current market conditions, i.e. volatility as gauged by the ATR. A catastrophic stop loss strategy is used as a safety net. When trading, price can fluctuate, effectively hitting tight stop losses. The stop loss has to be large enough to keep you in the trade. The catastrophic stop loss is larger than regular market activity. Note that there are three other stop strategies used and John Paul teaches you to take the stop loss that comes first. For example, a prove-it stop might get hit first, allowing for a smaller loss compared to a catastrophic stop loss. At around 3:26 in the video, John Paul advises checking whether the market is overbought or oversold. It’s best to take the Atlas Line trades as close to the initial signal to avoid this market “exhaustion.” Doing so will help avoid price stagnation and improve chances of reacing the profit target.
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