What do you do when there are contradictory signals to buy and sell in a short period of time? These market flip-flops can cause losses. John Paul explains and demonstrates through this video and use of the Atlas Line signals.
Before we get too much further, the day of the recording was July 10, 2020, using the ES 09-20 contract. Follow along with the price action on your charts, if you feel inclined.
We begin with an Atlas Line long signal at 3140.50. A trade is placed. The entry was 3141. The profit target is +2.5 or 3143.50. By the way, avoid using market orders unless volatility is slow or within historically “normal” values.
Soon after the trade was placed, we see price go against us by -1.25 points. This is why we have a stop loss large enough to absorb fluctuations. We use multiple types of stop-loss strategies, though only one stop is actually placed with the trade. We know the rules for the other stop losses and apply them should, for example, we find ourselves in a trade for too long. In that case, the rules of time-based apply and we may get our at a smaller profit, breakeven, or a loss smaller than the catastrophic stop. Indeed, we call the larger stop loss in place the “catastrophic stop,” as it acts as a safety net should price go against us.
Considering both Atlas Line signals that appeared on this particular day, without the Atlas Line, you may have experienced losses and frustration by the way the market flip-flopped. Just imagine the same chart without the Atlas Line’s guidance. It would have been easy to be lured into losing trades. The Atlas Line can add a degree of clarity and insight.