The focus of this webinar is trading during the morning. For us in US/Eastern time, this “day session” starts at 9:30 a.m. and continues for the next 2.5 hours. This period reflects what was once the pit session, a time when traders who place orders physically in the trading pits instead of doing so electronically.
First, John Paul does a review of the ATR and his preferred settings. The ATR provides a measure of volatility. It does not indicate price direction. In the morning, there are often more traders engaging the markets than the afternoon. If you look back in history, you will see instances where the green ATR line rises at market open, then slopes downward into the afternoon. Fridays tend to be slower. Slower markets produce choppy conditions. Choppy conditions are when price doesn’t really go anywhere – it moves back and forth and this makes for difficult trading. In the video, John Paul shows how the ATR can look when the market is choppy. The best volatility for trading is when the ATR is between 1 and 5 points.
When traders guess market direction, they can run into problems. For example, upon seeing multiple bearish candles, you may assume the market will continue downward and place a trade. You may have entered too late and missed out on the start of the move. The Atlas Line tries to signal these opportunities in advance. At about 16:00 in, you can take a look at recent Atlas Line signals. When two bars close above or below the dashed line, expect a long or short signal to appear. If a small P or an S appears next to a candle, that is a pullback or strength trade. Generally, the profit targets for these S and P signals is one point. The main Dbl Bar signal profit target is based on the ATR. The Atlas Line offers these four ways to indicate the possible direction of the market. The slope of the Atlas Line also matters. Traders often see price follow the slope of the line. These conditions are fine – the Atlas Line will produce S and P signals. John Paul prefers intersections, because this usually means a Dbl Bar trade will occur and that has a larger potential.
At about 25:00, John Paul adds the ATO signal. The ATO is one of the first trading methods we offered, and is now found in the eight week Mentorship Program. Like the Atlas Line, the ATO provides entry signals. They look a bit different – instead of Dbl Bar, you will see Long or Short along with the entry price. The ATO stands for “At the Open”, and like its namesake, the strategy focuses on finding opportunities right after the market opens. The ATO also uses the ATR to determine the profit target. Through trade management, John Paul adjusts his profit targets to reflect the current ATR value. This is because he wants the profit to be a value price action possibly reach based on current market conditions. Many other trading systems use predefined values that cause traders to take on more risk.