Recent News & Trading Tips
Learn NinjaTrader 8 – How-To Webinar
If you haven't upgraded to NinjaTrader 8, now is the time. The new platform is faster and packed full of improvements. Now that the production version has been available for some time, DayTradeToWin's popular trading software (the Atlas Line, Trade Scalper, At the Open, etc.) has been updated for compatibility. Recently, DayTradeToWin.com conducted a webinar explaining all the basic facets of NinjaTrader 8. This includes downloading and installing the platform, installing a data feed, opening charts, configuring charts, installing and applying indicators, the SuperDOM, saving presets, templates, and workspaces, how to back up and restore the platform, and how to correct data issues. I have not seen a webinar this comprehensive in scope. If you're new to day trading or want to finally make the switch, this is a must-watch.
Let's go over setting up a chart. First, you need to open a chart from NinjaTrader's Control Center. Go to New > Chart. The Data Series window will appear. In the top-left, select the market (instrument) you want, e.g. Futures > ES 06-17. The area on the right is now acessible for customization. The settings here are very similar to NinjaTrader 7. Once you're done configuring, click OK. A chart will appear. On this chart, there's a row of buttons at the top. Click the one with a mouse pointer and choose the crosshair option. A crosshair will let you accurately measure candle placement. Also, enable Chart Trader, but select the Hidden option. You can combine this feature with an ATM Strategy later. This way, you can see the profit target and stop loss directly on the chart. Note the ability to easily switch time frames, markets, and tabs.
Installing indicators is similar to the NinjaTrader 7 experience. Go to NinjaTrader's Control Center > Tools > Import > NinjaScript Add-On > navigate to the folder where the indicator .zip exists, click it, then click Open. NinjaTrader 8 takes a little longer to import indicators. A success message should appear. Note that there is no need to open up an indicator file and do anything with its contents. NinjaTrader takes care of all that during the import process. To add an indicator to your chart, right-click the chart > Indicators > find the new indicator in the list and double-click it > click it in the bottom-left panel > adjust settings on the right > click OK. The indicator should then appear. To remove an indicator, use the same Indicators window. Uninstall an indicator by Tools > Remove NinjaScript Assembly.
NinjaTrader 8 Indicators for Price Action Trading
Here's a look at NinjaTrader 8 using the indicators from DayTradeToWin.com. If you're transitioning from NinjaTrader 7, you will be familiar with the layout in this new version. It's important to slowly upgrade to ensure that all of your settings and indicators will remain compatible. Don't put yourself in a position where you are using a platform that's entirely unfamiliar with indicators that may not work as expected. You can install NinjaTrader 8 alongside NinjaTrader 7, so it's easy to compare the changes. To install an indicator, go to NinjaTrader's Control Center > Tools > Import NinjaScript Add-On... > navigate to the folder containing the indicator .zip file and double-click the file. The indicator should then be imported and you can add it to a chart.
How do you add an indicator to a chart? The process is very similar to NinjaTrader 7. Simply right-click the chart > Indicators... > select the indicator in the top-left list and double-click it > the indicator should appear in the bottom-left panel > click it and configure desired settings in the right panel > click OK > the indicator should appear on the chart. In the video, you can see how all of the DayTradeToWin indicators are available: ATO, Roadmap, Atlas Line, Trade Scalper, News, Multilines, and ABC. In terms of enhancements, the Atlas Line now shows "Atlas" before all the double bar trades. Similarly, the ATO uses "ATO" before the entry price. This makes it easy to tell the signals apart. The news indicator has been entirely revamped, it's much cleaner under the hood and its colors work on both light and dark charts.
The Roadmap indicator now provides entry signals and clearly labels each zone. It's one of the main methods taught in the eight-week Mentorship Program. It overrides other strategies taught in Mentorship. The underlying strategies is based on common manipulation levels. In the Mentorship class, you learn how to use price action to find trades on your own without the aid of indicators. The only exception to this is the Atlas Line, which remains a proprietary calculation. Price action ensures that you're trading mechanically, without emotions. The ATO (At the Open) strategy is making a resurgence. It was the main strategy that DayTradeToWin offered within the first couple years of its existence. Now, traders have the opportunity to purchase the strategy and get the same, reliable signals.
Futures Contracts: Market Orders, Limit Orders & Scalping
This is the second half of a recent webinar conducted by John Paul of DayTradeToWin.com. In these live webinars, he's broadcasting his trading charts live so attendees can see exactly what he's looking at. This providers onlookers the opportunity to experience real-time charting conditions, as though they are looking at the markets with the same amount of uncertainty. Therefore, when John Paul demonstrates a technique or provides insight into how he trades, and a trade actually works out to be profitable, the results are more palpable. Unlike other vendors who use live trading rooms daily as their main product, DayTradeToWin.com does it differently. While live webinars like this one is used for promotional purposes, the only other type of live room environment offered is with each course's included live training.
John Paul takes a real-time trade worth three ticks. NinjaTrader's Dynamic SuperDOM is preferred over Chart Trader because of the extra bells and whistles. Each Trade Scalper trade is worth about two to four ticks. The maximum stop loss is six ticks. The ATR (Average True Range) is used to assess risk and determine profit target and stop placement. Speaking of profits, even if you have the ability to trade many contracts (over 10), do so cautiously. It's better to practice first, eventually begin with one contract, work your way up to two as success is indicated. If you eventually work your way up to over 15 contracts, then you may not always get filled when using limit orders. Instead, market orders increase the chance of getting filled for larger contract quantities.
In this presentation, John Paul provides a number of general trading guidlines. Within the first 10 or so minutes of market open, traders are competing against one another for positions. Stay out of the market the first 15 minutes or so until an equilibrium is reached. Two scalping strategies are taught in the Group Mentorship Program. For John Paul, his personality prefers trading two or three times a day on a five-minute chart instead of scalping. However, some people like multiple fast moves daily, so that's why a scalping product is offered. When scalping, it's best to trade up to five or six trades daily at most. If you continue trading later in the day, you're subjecting yourself to increased risk. The market tends to chop later in the day or entirely stall out with little activity. Also, unexpected news events can be hazardous.
Choppy Markets – E-mini Trading Tactics
At the beginning of the day, when I look at a chart, I am open to the idea the market can go in any direction. I can have the right mindset, the right strategy in place, yet the market can still go against me. Such losses, which can be considerable, are a part of day trading. It's important to be honest with oneself about the risks and rewards for a speculative activity such as futures trading. Similarly, a series of large wins can produce a false sense of confidence. For example, a strong trend may tell you price will continue to head in one direction; that you can do no wrong. You may be tempted to buy the market multiple times, perhaps at increasing amounts. This is yet another way strong market direction can deceive traders. Is there anything else, we as traders, need to look for?
Yes, in fact, market conditions that never escape a range of a couple points or ticks can be equally, if not more, devastating. Imagine the following scenario. The market just opened. The ATR is high. You have a couple of signals telling you the market is about to go short. You confidently place an order to sell. Price begins to drop. Ten minutes later, price has continued its approach towards the profit target. Price is a tick away. Suddenly, the market begins to retrace. The candle closes at your entry. It's a breakeven trade. Frustrated, you watch the next hour of market activity. Price never goes beyond three points in either direction. Yes, you're stuck in a range. And despite high volatility (a high Average True Range), that market has deceived you. These are choppy conditions – some of the most difficult to trade.
What can be done? Well, you had two confirming signals. If you've been successful in the past with those methods, there's no guarantee for future results. However, you need to look at the bigger picture. Is one day of trading going to decide your overall success and career as a trader? If so, you should look for regular employment. With trading, it's about overall performance – looking at months of activity to decide how effective or ineffective a strategy is. It's okay to lose a battle. It's more important to win the war. And that's exactly what John Paul is saying in this most recent webinar. Watch the recording and see how to handle tricky market conditions.
John Paul Tells Traders How to Trade the News
I don't know about you, but I've been in a trade that was going well – almost hitting my profit target, then suddenly out of nowhere, price rapidly takes off in the opposite direction. My stop loss is hit and I'm left scratching my head wondering what happened. I try to catch a few more trades later to make up for the loss. In the afternoon, I checked the news to find a Jobless Claims report came out that morning, and for 20 minutes or so, the market went haywire. Could this loss have been prevented? John Paul from DayTradeToWin.com says yes. He explains his approach in this live webinar video recorded in front of a room full of traders.
His approach can be described very simply: check news events before the trading day begins. All of the planned market-moving news is outlined on financial calendar websites. Bloomberg's updated Econmic Calendar uses blue star symbols to emphasize "marketing moving indicator" events. Similarly, Forex Factory and DayTradeToWin's website and news indicator offer news listings. With the news indicator, you can see directly on your chart when a high, medium, or low-priority event will occur in advance. John Paul says to stay out of the market until things calm. He also explains how you can find a trade based on news – that's right, an entry opportunity. Watch the video to learn more.
There's a lot of other great material in the video. If you want to see how the Atlas Lined and Trade Scalper faired in the markets on March 1, 2017, skip ahead to the 45:50 mark. Otherwise, watch straight through to learn about the benefits of trading candlestick charts, how trends can be misleading, a refresher on how the ABC strategy works, how to trade under slow conditions, and more.
Beginner Traders – What's the First Step?
I get asked by many people who are new to trading on what the first step should be. Some prefer to visit a bookstore, buy and work through a couple of popular trading books, and expect positive results in a short period of time. While having a structured, knowledgable trading background is important, there are many traders who haven't read a single, traditional trading book. Other newcomers will read forums, websites, figure out they at least need a trading platform. Indeed, this is a good first step. After all, you need a platform like NinjaTrader to place trades. A simulated trading environment is ideal for practicing. NinjaTrader is one of the few platforms that provide this at no cost.
Another approach new traders take is adopting the trading configuration of well-known traders in the industry. This can either be a good or bad thing, as not all trading businesses or professionals offer the same quality of service. In fact, many trading vendors pop up almost overnight, have a website, then disappear a few months later. Longevity in this industry is rare. DayTradeToWin.com has been online since 2009 or so, first offering the ATO (At the Open) strategy, then expanding to other courses and software. The current lineup offers four main products: the Atlas Line, Trade Scalper, Power Price Action, and Mentorship Program. Mentorship is the best option because it includes lifetime licenses for everything.
In this webinar video, you can see why John Paul's courses are so popular. The Atlas Line's signals are displayed live. Attendees asked detailed questions. He covered the ATO, Trade Scalper, ATR (Average True Range), Bar Timer, ABC, trailing stops, setting the Windows time correctly, how to interpret candlestick patterns, and much more.
Market Crash Expected: Mentorship Designed to Prepare
Are you aware of the anticipated crash in the financial markets? The E-mini S&P may be hit big, so it's time to know what to do when it happens. Handling the crash will be one of the focal points of the upcoming Group Mentorship class. John Paul will be teaching this eight-week class. He fully explains how each of his strategies work. The goal is to make you a professional day trader with enough knowledge to handle whatever the market throws at you. The next class begins Tuesday, March 14 at 7 p.m. EST. Because the beginning of 2017 has benefited investors, this is an excellent time to learn what they know, so you can also find success.
In the first week of Mentorship training, you'll learn the powerful ATO (At the Open) strategy. The E-mini S&P market often displays a distinct pattern during the first couple hours it opens. You'll learn how to spoit it and where to place your trades. The ATO is a breakout strategy, meaning you're looking to catch the move as it heads higher or lower beyond a certain price point. The online webinar room is where you'll be learning this and about 10 other price action strategies. The Atlas Line, Trade Scalper, Power Price Action, Roadmap, Price Action Scalping, Manipulation, ABC, Yo-Yo, Stair Step, and other strategies are explained. Learning on your own and making big trading mistakes can be costly. Instead, invest your time and money in education. Click here to find out about the next class.
Atlas Line Long & Short Signals in Two Days
Here are two examples of what a trading day can look like if you're using the Atlas Line trading software for NinjaTrader. Rarely will you see price trend in one direction throughout the day. However, when it does happen, and when price intersects the Atlas Line, you can usually expect a Long or Short signal. Remember, the entry rules for these Dbl Bar trades is two closes above or below the line. On the second close above or below, that's when the text signal will appear. The text displays the desired entry price to be filled. A tick in front or in back of the trade is not a big deal, but generally, get in as close as you can.
The Pullback and Strength trades are additional signals that appear after the main Dbl Bar signals. These allow for additional opportunities as the market hopefully continues to move in the expected direction. On January 5, 2017, the Atlas Line produced three Dbl Bar trades. In total, there were far more Strength and Pullbacks. There's no requirement to take any of these trades. You will need to learn how all of the signals work and determine market tradability through the live training with John Paul. Every trader receives the same signals, providing the chart is configured the same way with incoming live market data. From a support standpoint, this makes it easy to clarify handling tricky scenarios. An email to the DayTradeToWin.com support department can clear up things fairly quickly.
Long & Short Term Price Action: January Effect & Atlas Line
During this time of the year and around holidays, markets tend to slow down as traders and big firms trade less. This results in less overall volatility. Despite this, John Paul expects the markets to offer plenty of opporunities in the remainder of 2016. In your charting platform, switch to a daily chart and compare December's ATR (Average True Range) vallues in 2015 with 2014, 2013, etc. Periods of volatilty may be caused by companies releasing annual reports, consolidating positions, announcements for holiday sales figures, and expectations for the new year. With such unpredictability, having a long-term plan is a good idea. The January Effect aims to provide just that.
At the end of January, 2017 the E-mini S&P's price may be higher than in the beginning of the same month. If that's the case, the overall direction of the market for the rest of 2017 is expect to also go up / be bullish. This is the premise of the January Effect. We will not know the direction bias until January 31 or so. Once the direction is confirmed, and if to the upside, we can look for long/buy retracements. The Fibonacci Retracement tool (included with NinjaTrader) aids in finding these opportunities. For example, as previously described, it can be configured to draw a mid line between two price points. This line at the 50% mark serves as the entry threshold for bullish retracements.
If you jump to about 21 minutes into the video, you'll see the Atlas Line plot a live signal during the webinar. It's a short signal with an entry price given of 2206.5. John Paul as the Atlas Line configured as a jagged purple line. This is the first Atlas Line trade of the day. He places the order in the DOM via selling at market and gets in at 2206.75. There are three Atlas Line stops loss strategies: time, proof, and catstrophic. The catatrophic is never more than twice the current ATR value. The time-based stop says that you need to get out after four bars (20 min. on a 5-min chart). The proof stop loss occurs when price closes on the other side of the line. If your profit target is not hit, you close out the trade when either of these three stop loss conditions occur.
Trailing Stops – Price Action Demystified
Imagine the following: you're in a trade waiting for the profit or stop loss to get hit. For two consecutive candles, you are in profit territory. It's very tempting to close out of the trade to lock in profit. But instead, you stick to the rules and hold on to the trade. The next candle starts to drop closer to your entry/fill price. You're very nervous at this point. Then price hits your stop loss. You've lost money on the trade. What if there was a way to make money on the trade without closing out the entire trade? There is – the technique is called "trailing a stop" or "trailing stops."
Trailing a stop is a way to "lock in" the gains you've made on a trade while still having one or more trades active. This means you need to be trading with multiple contracts and have the funds to allow you to do so. For trading up to two contracts, John Paul recommends a minimum account size of about $4,000. He encourages keeping the same account funding / number of contracts ratio as you grow the account. He says it's easier to use trailing stops (and compute the little bit of math involved) when using a contract quanitity that's divisible by two. That means you trade with two, four, six, etc. contracts. What triggers your trailing stop exit point is up to you. John Paul has used half of the profit target, which is based on the ATR (Average True Range). Other trades like to use a fixed value or a precentage based on other market variables. Generally, you want to lock in any profit and perhaps account for brokerage commissions for placing multiple trades.
Hopefully each trade you place is based on pattern that has had a history of performance success. Although past performance never indicates future results, simply guessing each trade is careless. When using trailing stops, it's important to employ a strategy that gets you in before the start of a big move. John Paul believes his Roadmap, Atlas Line, and X-5 strategies are forward-looking enough to do just that. The earlier you get in, the sooner you can ride the trade up (or down) into profit territory, and the sooner you can lock in any gains. The market should also be volatile enough to allow for a little trending action. If the ATR is below a point, the market is more likely to chop and you won't be able to trail a stop. An ATR between two and three points is more normal and better for trailing stops. According to the DayTradeToWin.com website, the only way to learn about the Roadmap trade and get all of the methods is to enroll in the eight-week Mentorship Program.
Atlas Line for NinjaTrader – 8 Points in 3 Trades
The 2016 U.S. election was controversial to say the least. Two candidates who offered very different solutions ran aggressive campaigns against one another. Social and economic policy differences caused American voters to polarize. In addition, the two candidates were arguably some of the least liked by the general public in recent history. In effect, in a mostly two-party political system, John Paul provides a plan to handle the E-mini's consistent volatility since the controversial U.S. election results. In effect, many voters selected who they felt was the better of two candidates or voted for one because they disliked the other much more. All of this was compounded by polls and media forecasts that turned out to be inaccurate. Trump won, and not by a little, but by a landslide. Well, in a little over a month, President Elect Trump will take office. We can expect the market to remain volatile. Holding public office and employing a new staff of about 4,000 people creates uncertainty. Add the Supreme Court judge decisions on top, and you have a recipe for markets that will likely remain volatile. What happens next?
In these uncertain times, having a trading plan is paramount. John Paul from Day Trade to Win provides a solution. He teaches ways to tell if a market is too volatile to trade. The ATR (Average True Range) should be between one and four points before you trade. Too low, the market is too choppy and slow to be worth trade. When above four points, that's simply too fast. On Election Day, Nov. 8, we saw the market crash over 120 points. Although the market has recovered, daily volatility levels are higher than normal. Luckily, John Paul teaches how the Atlas Line can be used to test if the market is overbought or oversold – that is, stalled out / not going anywhere. After a series of large bars, the market can stall out. In many cases, it can retrace, as most days do not continue to trend in the same direction. In this video, there are three trades that are worth two points or more. Not every trade with the Atlas Line is a winner, but it's easy to see why the strategy is so popular.
The video was cut from a longer, live webinar presentation in which John Paul shared answers to popular trading questions such as, "When is the best time to place a trade?" and "Is it better to sell or buy?" In volatile markets, one of the biggest problems is deciding how much of a profit target or stop loss to use. It's tempting to go for a larger profit target because of the bigger possible payout. And with faster moving markets, the stop loss also tends to increase to account for larger than normal fluctuations. You want to stay in the trade after all, right? If you're trading only because of the volatility, then that's the wrong way to look at it. Volatility should be respected. Look to see if the market checks all of the boxes for tradability first. Then, look for trading opportunities as taught by John Paul. The Atlas Line usually produces multiple Long and Short signals daily. The smaller S and P signals are worth about a point each. The included live training explains how it all works.
Webinar: Advantages of E-mini S&P Morning Trading
If you were given the option of trading the E-mini S&P in the morning, afternoon, or evening, what would you choose? A novice may look at the volatility and decide to trade when the market is not moving as rapidly. While this may reduce the risk on a single trade, John Paul from DayTradeToWin.com would argue this trader would have a hard time reaching his profit targets consistently. Overnight may be the most convient for the 8 a.m. to 5 p.m. working person, but there are fewer opportunities. The afternoon is significantly better than the evening. However, the afternoon rarely has the kind of volatility that matches the morning. The only regular period of increased price movement is right at market close. And, according to John Paul, these last moments of the trading day are very unpredictable. By far, the morning offers the most consistent period of tradeable volatility.
One of the ways you can test volatility is to use the Average True Range (ATR). If it's between one and five points, the trading conditions are decent. You will still have losing trades, but at least the market is less likely to chop back and forth if liquidity is greater. Using a Period of four, the ATR indicator will average out the last four bars and present a value. This indicator is common among many platforms, so even if you don't use NinjaTrader, you should be able to experiment. Remember that John Paul's definition of the morning is between 9:30 a.m. and noon. This 2.5 hours is also refered to as the "A Period" in his ABC videos. Scroll back through recent history and you'll see a trend where the ATR line slope is bearish in the afternoon. When there's a news event, the ATR will spike. This is true when the market reacts bullishly and bearishly. For that reason, don't use the ATR to predict direction.
There are a couple of ways to make the most out of the morning session. Firstly, if you've participated in the eight week Mentorship Program, you should have access to both the ATO and the Atlas Line. The ATO is the "At the Open" and is one of the pioneering price action indicators that allowed DayTradeToWin.com to become so well known. Although you fully learn the strategy, a helpful indicator is included. Instead of looking for the trades yourself, just look for the Long or Short signals and the dashed line that points to the entry candle. This strategy only works in the morning. When coupled with the Atlas Line, you are provided with an additional confirmation. John Paul likes to see when both tools are telling him to go Long or Short. The Atlas Line may plot a little later than the ATO, but there are many occasions where signals from both tools plot together.
Webinar: Trading Risk, Indicators, Price Action, & the Atlas Line
John Paul just released this full hour-long webinar, where he discusses trading risk and several techniques on how to manage it. The webinar was at capacity, as many traders were eager to see the Atlas Line and other strategies. His point is worth reiterating: trading is risky business and it's not for everyone. Only trade with money you can afford to lose. That means extra capital you don't mind parting with, if the market turns against you. Talking to a licensed broker is a good idea, as they can explain in detail all of the costs that will go into trading the specific markets you want to trade. Also, remember all of the Day Trade to Win trades should be considered hypothetical, as the disclaimers on their page footers have said for years.
Firstly, NinjaTrader has a huge indicator list and most of the indicators are not worth using. Many indicators work like this: the market moves, the indicator performs a calculation and plots something on the chart, repeat. This is why most indicators are known to have a "lagging" effect – they look into the past in an attempt to predict the future. There are a few indicators that are forward-looking. The Atlas Line is one of them. Once the Atlas Line begins to plot the diagonal dashed line, the angle is consistent. Therefore, you know ahead of time where trades will be. You can get your DOM or ChartTrader ready to place a trade when there is about to be a second close below the dashed line. It is true the ATR indicator, used for determining volatility, is based on previous values. But note that John Paul only uses the last four bars for his ATR configuration. This provides for an updated picture of his risk management style. As you have probably seen, doubling the ATR (and maxing out at five) is the catastrophic stop loss he uses. If the profit target is not reached, price may hit a smaller stop loss – either a prove-it or a time-based stop, resulting in a small profit, break even, or a loss that's smaller than the catastrophic.
A common mistake among traders who want to control risk too aggressively is using a tight stop loss. Remember, the goal of trading is to make profit. You have to be open to losses. If you are trading too conservatively by using a very small stop loss, you can lose a lot of money on multiple trades. This is because markets rarely trend in one direction without fluctuating. Watch the candles. You will see price move up and down constantly. If you had a small stop loss, it would be tagged and you'd be out of the trade prematurely. Instead, it's better to use a maximum stop loss you can afford (hopefully that is the catastrophic stop), and if the profit is not hit, look for an opportunity to execute another stop loss strategy early.
Trading Is Risky: What You Should Know
Day trading or any type of long or short term trade executed in a futures, currency/forex, options, or stock market involves risk. Among other factors, the amount of risk is dependent on the unique characteristics of the market, your stop loss placement, the costs associated with placing the trade and maintaining the position, and how much a potential loss will personally impact your finances. Significant financial losses can occur regardless of any preparations or strategies involved. The markets are inherently unpredictable and should be treated with caution.
Some traders make the mistake of trading with money that should be used for supporting themselves, their families, businesses, etc. In comparison, traders should acknowledge the high stakes environment of trading and only trade with money they can afford to lose.
Traders should be weary of any company selling a system that promises results or claims low risk. Such claims are invalid and these companies likely do not have the best interests of traders at heart. Marketers can be very adept at convincing traders of the profitability of a system. Even if these claims seem plausible, critical thinking and caution must be used.
Traders need to take the time to consult with a licensed broker to understand trading costs and risks. This includes discussing fees, margins, and risk vs. reward. Practice is also important – knowing how to operate trading software can reduce loss. For example, you need to know how to exit a trade if the trade is causing a loss. Before you enter a trade, you should have rules that dictate when to get out. The psychology and circumstances of live trading can be different from practice. As such, traders need to cautiously test the waters before making any executions. Some brokers are able to assist with providing a practice environment. In addition, NinjaTrader provides access to their platform for free for simulated, practice trading.
This video provides an example of how John Paul assesses risk using the Atlas Line. When the distance between the plotting line and price is to great, he sees this as a riskier time. News events, whether planned or unplanned, can also increase risk by causing sudden and drastic changes to market volatility. Referencing a financial market calendar is one way to keep tabs on upcoming events. A trader should always be aware of breaking news as well. Generally, John Paul waits for riskier market activity to subside before trading again.
Day Trade to Win acknowledges the risks of trading within its educational services. Website content, videos, courses, and training inform traders of the risks and costs of trading. Day Trade to Win focuses on providing an environment where traders can learn how to counter common mistakes and improve outcomes using a commonsense approach. Traders are taught to respect the markets and what it means to trade. This is one of many reasons that set Day Trade to Win apart from other vendors in the trading space.
Price Action: Multiple Techniques for Slow Markets
As a professional trader, there is a temptation to place a trade every day, regardless of the volatility of the market. However, that's not always a good idea. How can one decide if a market is tradeable? There are many indicators that attempt to predict price movement, but very few, if any can predict volatility. Volatility is caused by banks, hedge funds, algorithms and other heavy market movers. This data, by its very nature, is difficult to quantify. Scheduled news events certainly cause volatility spikes. Also, significant unplanned world events shift markets easily. John Paul takes a more reactionary, in-the-moment approach. He uses an indicator called the ATR (Average True Range) to assess volatility. The ATR averages the values of the last X number of candles. In NinjaTrader, this average is presented as a value and a green line on the bottom of a chart. You'll see it in the video below. Normally, the ATR uses a period of 14. John Paul prefers a value of four because it's more relevant to what's happening in the now.
Methods of Evaluating Market Speed
The first part of this two-part webinar demonstrates how effective the ATR is in assessing tradability. Generally, an ATR value between 1 and 4 is preferred. In this last month or so, the ATR has been rather low. The markets have been slow. It's been rough on traders. Slow markets tend to chop back and forth unpredictably. Trends are always preferred, and unfortunately, they occur about 15% of the time. Switch to a daily chart and you'll see groups of three or more candles in a range. Then suddenly, a candle will reach higher highs or lower lows. It's a problematic pattern and is often seen in these summer months.
Once you learn how to determine the relative risk associated with a market's speed, you can then look for opportunities. The ATO (At the Open) is one such strategy. Instead of looking for opportunities all day long, the ATO focuses on the opening market moves for an entry. Why? If you're using intraday charts, you've probably noticed more activity between 9:30 a.m. to noon than any other period. This period consistently produces the best volatility. Market open is when the big players push the markets. John Paul teaches the ATO method to his Mentorship students. In short, they learn how to identify a certain range and pattern and wait for the right opportunity for price to “say” that it is ready to move. Profit target and stop loss rules are also taught to fully manage the trade. A secondary ATO setup, dubbed “Chase the Trade” provides additional opportunities.
Ways to Maximize Performance and Minimize Loss
Another problem with slow markets are fills. It's tough to get filled under slow conditions. One way to increase your chances is to front-run trades. By “front-running”, I am not referring to the shady practice whereby brokers place trades on their own accounts by using advanced knowledge of customer orders. John Paul's version simply means that you are placing your profit target or stop loss one tick or pip ahead of where it would normally be placed. Price does not have to “try” as hard to reach the goal. Sure, you are taking one tick or pip less profit. You're also mitigating a small amount of risk if moving your stop loss closer to your entry. With slow markets, a more conservative approach is often appropriate. If your trading platform supports it, consider placing MIT (Market if Touched) orders. MIT orders allow you to get filled at market if the order price is achieved.
Finally, if you have not yet looked at any scalping techniques, now is the time. Scalping is easily one of the most valuable trading strategies one can master. The concept of scalping is placing small, quick trades, multiple times a day. The profit targets and stop losses are much smaller than other methods, usually. John Paul's interpretation of scalping, the Trade Scalper, does not use profit targets over four ticks. Six ticks is the maximum risked per trade. When the market is slow, and you are wearing scalping goggles, you will be able to see opportunities within smaller price fluctuations. You're not going for the two point move. You're going for a few ticks here and there to bring in profit throughout the day. Again, the morning is the best, but there are scalping opportunities in the afternoon and evening. The Trade Scalper works on other markets as well. Switching to another market, perhaps oil or a currency, is a good way to diversify if the U.S. E-mini is stagnant.
Fundamental Price Action Videos with John Paul
The ATR (Average True Range) is a forward-leading indicator that does not lag. Traditionally, the ATR is used to assess volatility. John Paul from Day Trade to Win takes it a step further, using its current value to determine a trade's profit target and stop loss. How much the market can realistically move at the current moment? Look at the ATR. Using a Period value of four, the last four bars are used in the calculation. Are you risking too little or too much? When basing decision off the ATR instead of a fixed value, your goals are more realistic. No optimization or historical references are required.
Ticks are the smallest level of moment on futures markets such as the E-mini S&P. Similarly, Forex markets use pips. Each market has its own system. On the DOM, Price Ladder, or Matrix, the next row up or down represents a new tick or pip value. The E-mini values each tick at $12.50. Four ticks make up a point, worth $50. In comparison, the British Pound is worth $6.25 per tick.
Common Points of Failure – Overbought and Oversold Markets
By now, you have probably seen the Atlas Line software and know that it produces long and short signals depending on market conditions. What happens after multiple long or short signals are produced and the market begins to stall? Firstly, the market has shown apprehension in moving in the anticipated direction. The dynamic profit target will be lessened as a result. If you're already in a trade, consider taking the money and run or lock in a profit with your stop loss. The time-based stop will have you exit after four bars, at a small profit, break-even, or a loss. In any case, be prepared to take action.
Another trick with the Atlas Line is its ability to tell if a market is overbought or oversold. You can calculate the distance between the plotting line and recent candles. You could be the last one in line to buy or sell, and it's not worth it. It's better to get in early. Numbers, price, the way candles are formed – this is all used to determine stagnating conditions. The Atlas Line can be used with the Trade Scalper. For example, if the Atlas Line is indicating a preference for short trades, only take short trades with the Trade Scalper. This is how filtering works. Essentially, you are using an additional tool to confirm direction.
Taking Profit During Trending and Choppy Days
Traders love trending markets. Unfortunately, trending days only occur about 15% of the time. The other 85% of trading days whipsaw, that is, chop back and forth to make profit taking difficult. One way to find meaning in the madness is to break the trading day into three sections. Why three sections? Generally, the market exhibits distinct behaviors at three times during the day. In the morning from 9:30 a.m. to noon, US/Eastern, large firms and hedge funds start trading the markets. Expect the most volatility. John Paul calls this 2.5 hour block, Part A. Around noon, the market slows down. This next 2.5 hours is Part B. If you're in a different time zone, simply adjust your hours. The behavior is the same. When price breaks the highs or lows of Part A, you have an entry opportunity in Part B. A trading “signal” without indicators – surprised? If there was a breakout in Part A, can you expect price action in Part B to continue trending? Remember, trending days only occur about 15% of the time, so in most cases, no. Now, we have the final section – Part C. Most of the time, do not expect much here. However, late-day sell-offs can occur. Two consecutives candles closing above or below the range of B is your Part C entry opportunity. Watch the video closer to understand how the ABC pattern works.
Trading Candlesticks – Understanding What's Important
Reading a chart is not as difficult as it may seem. Subtle signs in the market can tell you something is about to change. Be vigilant and pay attention. If you can read the chart and understand what you see, you'll have an advantage over most traders.
Fluency in the Japanese language is not required to understand candlesticks. Interpretation is fairly easy. You do not need to use the candlestick lingo used by other traders. Knowing the formation and what it means is enough.
Ever heard of these?
• Shooting star
• Evening star
• Hanging man
Instead of memorizing what each term means, focus on the following ideas for candlestick interpretation. This is how John Paul of DayTrade to Win inteprets Yo-Yo Bars (also called Yo-Yo Candles).
How can Yo-Yo Bars be effective in understanding a chart?
1. Markets move up, down, sideways, and repeat using any combination of these movements.
2. Focus on trending markets – those that show a consistent direction.
3. As price moves up or down in a trend, scan for a resting phase indicated by the appearance of Yo-Yo Bars.
4. During these Yo-Yo periods, the market is stalled and fails to continue in the expected direction. Buyers are “absorbed” by sellers and sellers are “absorbed” by buyers.
5. Yo-Yo Bars will often appear as a group because price fails to move further.
6. A cluster of Yo-Yo Bars indicates attempts at the marketing trying and failing to move further. This is where you should focus.
7. One Yo-Yo Bar is not enough. A group may indicate something is truly occurring.
8. Yo-Yo Bars are not limited to any specific time frame. You will see them in 5-min, hourly, and daily charts.
9. Yo-Yo Bars are not limited to the E-mini S&P, currencies, or stocks. This price action behavior occurs in every type of market.
10. The longer the time frame, the longer it will take to form a group of Yo-Yo Bars. Faster time frames require smaller targets and stops to manage each trade.
Understanding price action does not have to be complicated. Similarly, using ten different indicators will result in a messy chart. The best way to read a chart is with a “less is more” philosophy.
Are you now able to find the Yo-Yo Bars? If so, you're on your way! The next step is to know where to place profit targets, stops, and entries for reversals, if they occur.
DayTradeToWin's 5 Ways to Prepare for Trading
Do you know how to plan your week in advance for any market, any time frame, or any situation?
Believe it or not, most traders do not plan ahead for the upcoming trading week. Most traders shoot from the hip to tackle the market at any given time. By comparison, serious, professional traders know how to prepare ahead of time, whether they're trading stocks, currencies, futures, or even forex.
What are some ways to prepare? Let's take a look.
1. News – simple, but overlooked by most. Those who use Day Trade To Win's trading courses (Atlas Line, Power Price Action, etc.) are likely already familiar with the significance of news events. Preparing in advance means that you should be aware of any forthcoming “high priority news events” to be released at specific times. The Day Trade to Win News Calendar and any other economic calendar like Bloomberg will provide a weekly listing where you can see multiple news events each day. Look for the high priority events, often indicated by red stars, flags, or other red colors. Specifically, look for such events at these time frames:
Watch for any Fed Chair or Janet Yellen events. Announcements from the Fed Chair can greatly impact the markets, even if such announcements are not listed with high priority.
2. Current market conditions – markets work in cycles. Sometimes, the market moves fast with high volatility. Other times, the market is slow and in a tight range. Regardless of the conditions, look at the last two to four days of activity to get a sense of the market's behavior. One of the tools John Paul from Day Trade to Win uses for this purpose is the ATR (Average True Range). The ATR can tell you if the market is in a slow or fast cycle. Most charting platforms include the ATR as an indicator or tool, that when properly used, can detail what the next day or set of days will provide. If the last two or three days have been slow, then you can expect more of the same. If the market has been very volatile with trending days, also expect more of the same. Cycles usually last between three to six days, then move on. Pull up a daily chart and you can probably see groups of three to four days that share similar ranges (large or small).
3. Extended holiday weekends – some holidays fall on Mondays or Fridays, which extend market closure beyond the weekend. These three-day weekends impact the trading week. If Monday is a holiday, expect the prior Friday to be slow. In contrast, Easter, Thanksgiving, Christmas, and New Year's holidays typically maintain consistent volume without interruption. For other holidays, be prepared for slow, trending, stair-step style trading, which is boring and not worth the risk. Friday mornings are fine to trade, but as you enter the afternoon, avoid the chop and slower volatility.
4. Current world events – recently, Brexit was announced in advance. Most brokers increased trading margins in preparation for the anticipated volatility. The same cautious mindset holds true for world events such as terrorism, natural disasters, or economic turmoil (e.g. the recent Greek financial collapse). The markets are interconnected. What happens in China does not stay in China, and will eventually sway U.S. markets. These ripple effects may cyclically affect the markets the next day or throughout the coming weeks, as previously indicated. Always be aware of world events!
5. All-time highs and all-time lows – new highs and lows for the year, week, or month, are very important and must be considered. As you prepare for the week ahead, understand the position of the market. No need to get overly analytical – simply know if the market may approach an all-time high (also called testing highs or double-tops). In some cases, markets will surpass highs and enter uncharted territory. These conditions cannot be ignored. Volatility is usually very high in these cases. As John Paul says, “Markets like to trade where they've already been.” When in a situation of uncertainty, expect uncertain results. You will not know how high the market will climb or fall, or when there will be a reversal. Stay out of the market when it's too volatile.
The content at this site was created by DayTradeToWin or its affiliates. The author(s) may have been directly or indirectly compensated for the content. All content should be should be treated as an advertisement. Trading is inherently risky and substantial financial loss can occur. Hypothetical performance is not indicative of future results. Results may vary due to the unpredictable nature of the markets, slippage, user behavior, geographical distance to data centers, and other factors.