Wednesday, November 30, 2016

John Paul Discusses Trailing Stops on E-mini S&P

Trailing stops - you may have heard the term before, but do you know what it actually means? More importantly, do you know how to use this technique as a safety net for each trade? A recent video published by John Paul explains how to use them in your trading:

As a trader, you've probably experienced a scenario where you're in a trade, hoping the profit target will be reached. It's going well - price is averaging .75 to about 1 point. Within the next two candles, you think that there's a good chance of profit. It's very tempting to lock in profit at 1 point. However, the rules of your trading method say to stay in the trade until the fourth candle. Two candles later, the trade is in the red and you wished that you had gotten out earlier. Then the stop loss is hit, resulting in a loss. A trailing stop is one way you may have been able to lock in some profit to turn that loss into a smaller loss or breakeven trade.

The premise is simple: place a trade with two contracts instead of one. At a specific point when you're in profit territory, exit one of the positions. That leaves you at profit with one horse still in the race. Hopefully the other trade is a winner. If not, at least you made something on the profit and hopefully it was enough to cancel out the losing trade. To make it easy, you can exit the position at half of the profit target. Also, if you trade four contracts, you can do so with two of the contracts. A contract multiplier of two is easy to work with.

Not every trading method is suited for trailing stops. You need to use something that will get you in early, before the move. For example, the Roadmap, Atlas Line, and X-5 strategies taught in the Mentorship Program are designed to find trades early. This way, you can let the trailing stop ride the trade up or down, hopefully locking in profit. If you get in too late, the early exit may only be worth a couple of ticks. Also, be weary of broker commissions. Commissions are usually charged on a per-contract, per-trade basis. Check with your broker so you know the fees and account requirements for trading with multiple contracts.

Tuesday, November 29, 2016

7 Ways to Improve Your Price Action Trading

The holidays are right around the corner, and with that, we need to anticipate erratic market activity. From slow, stagnant markets to volatile sell-offs, trading can vary quite a bit. Remember these ideas when your placing trades this holiday season.

1. People take vacations during this time of year - that's obvious. However, large trading firms may be trading less because the big wigs are out of town or they want to end the year on a conservative note. That leaves the markets to the small guys. With less volume in play, those who form the middle and bottom of the market may push prices less predictably than normal. Have your DOM ready to close out a trade if things go wacky.

2. Market closing hours can catch you by surprise. On half-days or days surrounding non-trading days, expect the market to move slower than normal. You don't want to be in a trade and then surprise - the market closed early!

Here are some upcoming dates:

Thanksgiving Day, Nov. 24 - market closes at 1 p.m. EST and reopens at 6 p.m. EST
Black Friday, Nov. 25 - markets close early at 1:15 p.m. EST
Christmas Day Observed, Dec. 26 - markets are closed and reopen at 6 p.m. EST
New Year's Day Observed, Jan. 2 - markets are closed and reopen at 6 p.m. EST

3. Ever heard of the Federal Open Market Committee (FOMC)? Their meetings can disrupt the markets and cause unexpected volatility. They are meeting twice in December 2016: on the 13th and 14th. After that, they meet again in late January. FOMC days are usually choppy.

4. Use the ATR (Average True Range) to assess volatility and risk. John Paul likes to use it with a period value of four to gauge potential profit target and stop loss settings. It's not an indicator of direction. When above five points or below 1 point, stay out.

5. At the end of the year, businesses are trying to reach equilibrium and show a nice performance record. Large positions are exited that cause ripple in the markets. Don't be taken out by this. If you see sudden volatility spikes, lay low until things normalize.

6. Most of the time, markets like to increase in value by year's end. If you're in a long-term short position, be weary of holding it too long. If you hold the position through January and January just so happens to show the January Effect, you could be in hot water!

7. Remember to cherish the holiday time with your family. It's a great time to unwind and put trading aside for a little while. Also, studies show that taking breaks can increase cognitive ability focus on tasks (like trading).

We hope you and your loved ones have happy holidays ahead!

January Effect 2017 - A Price Action Strategy for the E-mini

Every year, traders look to price activity in the month of January to help predict what may happen for the rest of the year. The pattern they observe is called the January Effect, and it's what John Paul from Day Trade to Win uses in this video. In short, the January Effect can only be used once January is over. That means traders will have to wait until January 31, 2017 to know the expected direction of the market. If price closes higher by January 31 than it opened earlier the same month, the market is also expected to close higher in December. John Paul talks about the historical accuracy in this video, showing multiple years where the prediction was correct.

The January Effect can be used as a trading method. One way is to wait for breakouts. If you think that price will inevitably rise higher over days and months, then you can wait for price to sink and catch it on the way back up. John Paul explains how NinjaTrader's Fibonacci tool is used to find opportunities when price retraces 50% of the way back up. He believes that's the best time to enter as price "proves" it wants to continue the upward trend. If 2017 behaves like previous years, then there will be many long (buy) trades that will be good.

At first glance, you may notice the Fibonacci tool he's using looks a little different than the normal configuration. All you need is the 0, 50 and 100% values. Simply add the Fib tool to your chart, uncheck the other values, add in the 50%, and voila, a similar price action tool. Going forward in time, you can copy and paste existing Fib tools to save time on setting them up all over again.

Let's eagerly await January and hope that price does close higher because that means more opportunities for traders in 2017!

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Get Started Guide Free Download CLICK HERE
Get Started Guide Free Download CLICK HERE