On June 3, 2013, the Atlas Line produced a Short signal around 11:00 a.m. Note that the actual text for the Atlas Line always plots a few bars back from the actual entry. So the price and time for the entry is really 1626 because you enter when there are two candles closing above or below the Atlas Line. John Paul draws an arrow showing the point of entry at about 28 seconds into the video. See the Long signal at 1632 as a comparison. Yes, the Atlas Line gives you exact entries so you know when to “buy the market.” This portion of calculating the entries is automated. You have to manually position the profit target and stop loss according to the rules John Paul teaches you during the client-only training.
While buying the market at the entry price (aka placing the order), you’ll notice the ATR (Average True Range) value can be rounded to 3.25. This 3.25 is our profit target – 3.25 points – the amount we’re hoping to profit from on this trade. We know exactly how much to go for based on what the current market conditions can produce. We use an ATR with a period value of four for this calculation. The E-mini has been more volatile as of late, allowing for bigger moves. It’s a nice change considering the relatively slow conditions of previous months.
If you do the math, 1 tick on the ES is worth $12.50 USD. Four points are in a tick. On the ES, a profit of 3.25 points is $162.50 while trading one contract. If you trade two contracts, that’s $325.00 on this one trade, excluding the broker round-turn fee, which would probably be around $9.00 for two contracts. Not bad! And according to John Paul, the previous trade in the video would have also been a winner.
John, you say that the first trade, a long on the atlas, would have been a winner. However, wouldn’t the catastrophic stop, twice the ATR or 6 points, have stopped you out? It looks like it went from 1632 all the way down to 1625, and it didn’t close there, on the other side of the Atlas line for an automatic stop, but it looks like it traded there. Wouldn’t that be a catastrophic stop, before it rallied?
Thanks. Awesome stuff.
HI Jason,
Great question,
This trade occurred smack dab in the middle of a news event, and should not have been taken based on that alone. I recommend double the ATR and the ATR was pretty high at 3.25- to 3.50 which would have kept you in the trade, but i don’t recommend putting on a trade like this during or just in front of a red star news announcement. I don’t think you have the Atlas Line® software yet, but during the training session i review this and much more on how to properly use the Atlas Line®. Since price stayed above the Atlas Line® the bias never changed to short, and the market went higher accomplishing the goal. In the afternoon the price crossed below and never looked back, which made for a nice short. Email me directly at support@daytradetowin.com if you have any questions for a quicker response.
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Thanks
JP