In this video, John Paul shows us an Atlas Line trade and also how to deal with oversold market conditions. John Paul says that after a big move occurs, the market will pause and take a “breath.” During this recovery phase, price may chop back and forth and leave you undecided when determining whether to enter the market again. By using the Atlas Line’s currently plotting price in relation to the price of the market, you can see whether or not it’s worth trading again or if the market is simply too oversold.
How do we know if the market is oversold?
• Check to see if a high priority news even is occurring. Typically this can be considered a problem because it can be very chaotic. We want to make sure we are not entering right at a news reaction candle. Use our Market News page to be aware of upcoming news events.
• The next thing is to check the ATR (set it up with a period value of four) and see if it’s within a tradeable range. John Paul extensively covers this in one of the videos on the top of our videos page.
How do we know that we are entering the market at a price which will move in our favor? For loss prevention, John Paul uses a few stops like a Time-Based Stop, Catastrophic Stop and a Prove-It Stop. We set our stop up automatically via NinjaTrader’s ATM feature. This way, we can quickly drag the stop to the desired price. Since we calculated the stop based on the current ATR value, we can change the stop to the correct level on the fly.
In the continuation video, John Paul shows us a short trade based off of the Pullback Trade on the E-mini S&P 500 market. The price is below the Atlas Line, so we only want to take short trades. John speeds up the video to show us what happens, how the trade is managed, and everything that goes through the mind of a trader when looking at taking a Pullback or Strength trade. All of these elements are covered in greater detail in the customer-only training. These live training sessions conducted by John Paul usually occur once a week and go over more of the rules that we can’t explain in these public videos. The training sessions are recorded, and you can refer back to them at any time.
Really great information John Paul, you are one of the few trading experts who actually clarifies what is important to beginners. Your advice makes price action trading more accessible to the “Average Joe.” The markets are very profitable if you understand money management, have a good system for taking advantage of high probability setups, and know what the smart money is doing. Thanks for the great insight into understanding price action trading better.