Three-Point Atlas Line Trade on E-mini S&P

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Here’s a live trade placed by John Paul on Monday, May 5, 2014. The dashed pink line is the Atlas Line. With two closing bars above the line, the Atlas Line signaled for a long trade. This trade occurred during a Mentorship lesson he was conducting with one of his students. If there were two closing bars below the dashed line, then the Atlas Line would have signaled for a trade in the short direction. In this case, John Paul has to wait for the second closing bar above the Atlas Line for the long signal to appear.

The current Average True Range (ATR) value is about 3 points. Therefore, the profit target will be 3 points. This is fairly volatile for the E-mini S&P. The ATR is used to determine the liquidity of current market conditions. If the market is too slow, it may not be worth trading. However, when the market tells us it is capable of moving three points, we want to maximize profit potential and minimize risk.

The entry of 1868.50 was filled via a Limit Order. Market Orders will work, but you’ll want to get as close as possible, if not a better price based on the entry price the Atlas Line signals. NinjaTrader’s Bar Timer is useful in timing when a bar is expected to close, although it is not shown in the video.

John Paul has a large catastrophic stop in place. If four bars close without hitting the profit target, he would get out at the close of the fourth bar at the current price. This is the time-based stop. If price closed on the opposite side of the Atlas Line, the prove-it stop is used. There are other stop strategies. Keep in mind the catastrophic is there as a safety net until the profit target is hit or one of the other, less costly stop losses is hit.

The result of this trade using 11 contracts is a profit of three points, equivalent to +$1,650.00, excluding trading fees.

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