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This webinar focuses on managing risk. John Paul discusses how the ATR can be used to determine profit range for each trade. The Bar Timer counts tells you when the currently plotting candle closes. Using the Bar Timer with the ATR, it’s possible to plan a profit target and stop loss. Essentially, a profit target is the “goal” of how much profit you believe the market will provide and the stop loss is how much you are willing to lose. Therefore, wouldn’t it make sense to set your stop loss to the current market price for no risk? Wrong – there’s always risk. And if your profit target is too small, there is a greater chance the constantly fluctuating market price will hit your stop loss. This is why stops that are too tight are a problem. Instead, John Paul prefers to use the ATR to determine what the market can produce. This dynamic approach changes based on “what the market can provide” instead of a fixed value. To be more conservative, he rounds the ATR down to determine the profit target.
At about 19:50 in the video, you can see the Atlas Line. There are no short or long signals yet because there needs to be two consecutive closing bars above or below. At the moment the Atlas Line was applied, there was only one closing bar. In a situation like this, you can get ready to place a short trade when the second candle closes. The bar timer is counting down and lets you know when to place that short trade, providing the bar does indeed close below the dashed Atlas Line. , the catastrophic stop loss (as its called), is generally a maximum of five points. For the maximum stop loss, John Paul doubles the ATR value to a maximum of five points. This is referred to as the catastrophic stop and it’s only hit if the profit target is not reached and the less penalizing stop losses are not hit. The main purpose of this stop is to keep you in the trade. At around 31:30, additional stop loss strategies are discussed and how they apply to the Atlas Line.
To learn other ways to improve your trading, call us at 1-888-607-0008. Using the link above to register. With your deposit for the next Group Mentorship class, we will provide you with the ATO course and software.