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.

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!

E-mini Scalp Trading for Beginners Explained

Day traders attempt to make money by buying an asset and then selling it later. Traders typically do this for days at a time, and often multiple times during the day. Long-term investors buy and hold for months or years at a time. The term "scalper" applies to day traders who hold trades for the shortest duration - typically minutes, seconds, or even less (for automated scalping algorithms). Some scalpers execute trades hundreds of times per day. Their goal is to accumulate small profits for a large reward. One of the drawbacks to scalping is that a trader has to be aware of the market at all times and be ready to place a trade at any moment. Commissions can also stack up because they are typically applied per trade, per contract. Low commissions are a priority for scalp traders.

DayTradeToWin's Trade Scalper is different from other scalping strategies. With the Trade Scalper, there is no need to have multiple positions open at once. Also, the number of trades per day is reasonable. On average, eight to twelve E-mini trades in the morning session occur. Also, John Paul, the founder of the company, recommends using the NinjaTrader platform. NinjaTrader is now a brokerage (NinjaTrader Brokerage) and provides low rates, which are ideal for scalping. NinjaTrader also provides Level 11 data and 1-min charts, which are utilized by this particular scalping method. Scalping has an advantage over other strategies in that it's designed to keep you in the market for a very specific, short duration. This is good because the longer you're in the market, the greater the risk. Having a clear-cut exit strategy is necessary.

The E-mini is a great market to scalp because of its value. Each tick is worth $12.50. Each point (four ticks) is therefore $50. On average, the Trade Scalper has you going for 2 to 4 ticks on each trade ($25-$50) with a maximum stop loss of six ticks ($75). NinjaTrader provides a full practice environment with live data. This allows you to get a sense of how the Trade Scalper is traded without risking real money. Using the report feature, you can get an idea of your simulated performance and factor in any broker commission fees. If you're a high-energy individual or like staying active with your investments, scalping is going to be appealing.

The Trade Scalper indicator for NinjaTrader produces two types of long signals: regular Longs and Shorts as well as Dbl Wick Longs and Shorts. The differences between them are taught in the included live training. Text signals are accompanied by directional triangles. They signify the entry point at which you want to be filled. NinjaTrader's ATM Strategy feature allows you to define a profit target and stop loss value ahead of time, thus allowing for quick entry. Utililizing NinjaTrader's Chart Trader lets you see the profit target on the chart as well as the stop loss. You can click and drag these green and red lines as needed. Keep in mind that adjusting the profit target and stop loss will put you in the back of the line, so to speak. Only adjust these values if you absolutely have to.

Scalping the E-mini Using Trade Scalper Price Action Method

New day traders should take some time to first understand the basics of their trading platform. Knowing how to place a trade, manage a trade, and then exit is vital knowledge. Also, making sure your charts are functioning correctly every day with live data is important. Once the trading environment becomes familiar, it's time to start tinkering with the markets. The goal of course is to find profitable trades. While no trading method can guarantee performance, the strategies taught by John Paul at DayTradeToWin show you how to limit overtrading - trading too much or using very large stops. For many traders, this is helpful because it teaches discipline. It's tempting to place large trades in volatile markets because you know that there is a chance the market can produce that big winner. Instead, John Paul believes being conservative and following an exact plan is better in the long run.

One of the ways to be careful in the market (instead of placing random trades and hoping for the best) is to apply the strategies of a day trading course like the Trade Scalper. The Trade Scalper is exact with the goals and risk: a profit target of about 2 to 4 ticks is used on average. The stop loss is a maximum of six ticks. No matter what, you will try to get out of the market with a loss of six ticks (excluding any broker fees).

As seen in the video, the Trade Scalper software produces signals that tell you to go long or short depending on the market's price patterns. Two types of Long and Short signals can appear: the regular kind and the Dbl Wick. The Dbl Wick signals appear when there are two consecutive wicks. More details are taught in the included live training and downloadable course. Scalping the markets is all about timing - you want to get in and out as quickly as possible. The retail version of the Trade Scalper indicator (not shown in the video) helps in this regard because it plots horizontal and vertical lines on the chart, letting you know when a trade is likely to occur. You can get your ATM Strategy ready (select the pre-configured template that matches current market conditions) and you're set. It's just a matter of following the rules and hoping the market will be consistent.

8 Points from Multiple Atlas Line Trades and Live Signals in Webinar

On the night of Election Day, Nov. 8, 2016, the E-mini S&P dropped over 120 points. This crash occurred when Donald Trump began dominating the Electoral College. Trading on or around Election Day is almost always volatile, but in this case, the unexpected truly happened. For months prior, nearly every poll consistently predicted Hillary would win by a landslide. The opposite happened, and when it became clear the likely president would be Donald, the market reacted. Markets "like" stability. When a controversial figure becomes leader of economic policy and the Republican party retains control over the Senate and the House, the market is likely to remain unstable. Despite the crash, the market recovered the next day, Nov. 9 and has been within fairly normal ranges. The abnormality comes from how regularly high the ATR has been. This is what John Paul focuses on in this webinar video:

His favorite tool for assessing volatility is the ATR (Average True Range). It's not a tool for direction. It averages the highs and lows of the last X number of bars (we prefer four) and provides a value and a line on the bottom of the chart. When the value is between one and four points, the market is good for trading. Above or below this range indicates too little or too much volatility. The ATR is a measure of "how far the market can move in a given moment," according to John Paul. As such, he uses it to determine the profit target and stop loss for each trade. Another way to manage risk is to use trailing stops. At around 45:00 in this presentation, John Paul shows how trailing stops trail the profit target to lock in a smaller loss, breakeven, or even a smaller profit. It's tempting to trade during volatile conditions because you may expect the market to reach over three points on one trade. That can be a lot of money. A trailing stop, if executed correctly, can a sort of parachute. NinjaTrader has a built-in feature for trailing stops. You can also manually manage your stop by enabling ChartTrader and using an ATM strategy. This shows the red stop loss line on the chart and allows for custom placement.

Check out the video above if you just want to see the Atlas Line trades from the webinar. There were three really nice trades here. Remember that John Paul often uses 1 * current ATR value (with ATR set to 4). First, a trade worth 2.5 points. The entry was at 2164.24. The market was volatile enough to go four points in the profit taking direction. Next, a trade worth 3.5 points with a signal at 2162.50. Again, the market pushed on through the target. It's better to be conservative and stick to the rules. The third trade, a long, occurred in the afternoon. That trade was worth two points with an entry of 2158.75. Remember the Mentorship Program provides the Atlas Line with a lifetime license. All of the other courses and software are also included. Training is twice a week with John Paul. His goal is to make you into a professional trader.

Is the E-mini Playing Tricks on You?

You're watching a live E-mini chart ready to take the next signal. The market has slowed down because it's the afternoon. Yet, the last few signals have been good and you're up for the day overall. Do you ignore the rules and take this trade? Do you risk what you've made so far? John Paul says the only way to trade is to follow his rules of risk management. In this Trade Scalper trade, despite the good signals, the ATR is only around a tick. That's too low. For this strategy, the ATR needs to be at least two to three ticks. Okay, you stay out, but you can't help yourself - you watch the chart to see what would have happened if you took the trade. If the trade fails, you will feel relief as though you dodged a bullet. If it's successful, will you feel regret?

Even with clear, concise rules, a trader can struggle with the discipline required to successful in the long term. Trading is a financial activity that comes with great risk. As such, trading requires great responsibility and self-restraint. Even if you have the best trading system in the world, a trader can subject himself or herself to unnecessary risk. Multiple good trades can falsely increase confidence. Similarly, multiple losing trades can cause a trader to question how he or she will ever find success in the markets. Only through a long period of objective, critical analysis and following the rules will a trader be able to definitely gauge a system. John Paul helps traders learn to manage risk. The live training that is included with purchase will show you how he keeps his head out of the market.

Finding Morning Trades in the E-mini S&P

DayTradeToWin.com's John Paul makes his case as to why the morning session is the best to trade. E-mini S&P futures is what you'll see in the video below. By the "morning session," this refers to the first 2.5 hours of the day, starting from 9:30 a.m. During this period, automated trading algorithms and big trading firms come out to play. They influence the market's volatility, and market movement can lead to great opportunities.

One of the ways to gauge volatility is to use an indicator called the ATR (Average True Range). John Paul uses the ATR with a Period of 4. This means the average price of the last four bars is displayed. This value determines his profit target and stop loss. He only trades based on where he expects the market can reasonably reach. One of the stops he uses is the catastrophic stop. It's double the current ATR value rounded down to the nearest whole tick. By trading this way, he attempts to avoid increased risk where the market can suddenly take off or drop significantly. He believes it's best to trade when the market is between 1 and 5 points on the ATR.

The Atlas Line, a popular trading tool offered by DayTradeToWin, has a number of features. In many cases, it can provide a long or a short entry signal prior to a big move. If price is continuing to trend below the line, there as still trades you can take. Pullback and Strength trades are examples of this. When an intersection occurs and there are two closing bars on the opposite side of the line, a Dbl Bar Long or Dbl Bar Short signal will appear.

The ATO software appears in this video. This was the first course John Paul offered and is now exclusively available in the eight week Mentorship coaching program. This strategy is all about finding trades with the initial market movement. The next Mentorship class begins Nov. 3, 2016 and will be on Thursdays and Fridays from 4 p.m. to 5 p.m. EDT (UTC-4).

John Paul Shares 3 Ways to Manage Day Trading Risk

Successful trading is all about managing risk and reward. In this hour plus webinar, John Paul shows multiple ways to check if a trade is riskier than normal. If you use the Atlas Line, once such way is to check if the distance of the plotting, dashed line is far from where price has plotted. In the included live training, the distance calculation is explained in detail. Another way is to watch for news events. An economic news calendar, such as the one offered on the Day Trade to Win website or Bloomberg, will tell you when to expect financial news that may cause significant volatility. If a news event has occurred, expect to wait about 15 minutes until activity returns to normal.

Another way to control risk is to use multiple stop losses. NinjaTrader allows for only one stop loss. How do you do it? Close out the trade under certain conditions. For the Atlas Line, one such condition is if price closes on the opposite side of the Atlas Line. For example, if you're going short based on a Double Bar Short trade, and one candle closes above the line, then close out the trade. Another strategy is the time-based stop. If after four bars on a 5-min chart (20 min.) profit is not made, then close out the trade. This will result in a small profit, breakeven, or a loss that is smaller than the catastrophic stop. The catastrophic stop is there as a safety net in case of sudden volatility. At maximum, this stop is five points. Normally, it's double the ATR value, rounded down to the nearest whole tick. There's some great info here about trailing stops and working with multiple contracts / order quantity.

Trading Risk and Reward

A common mistake among traders is thinking the markets are a quick way to get rich. This is false. Trading is very risky. If you're not careful, you can easily lose thousands or more (depending on your account size and broker setup). Even if you spend a significant amount of time practicing in a live simulated environment, live trading can be different. Each trader is different. The psychological impact of knowing real money is at stake can cause panic and unwise decisions.

For these reasons, traders should be well-funded and capable of absorbing significant financial loss. A common term among traders is, "Only trade with money you can afford to lose." This is true, as trading with money normally used for buying groceries can result in a problematic situation for the trader and his or her family. If a person has had past issues with gambling or impulse control, trading should be approached with even more caution.

There are thousands of websites that sell day trading products and services. These websites can be very convincing, either directly promising or alluding to increased performance. Remember that nearly anyone can create a website. Also, consider that there is a tendency for traders to always be on the hunt for what works. As such, trading businesses can be lucrative and prey on unsuspecting traders. Traders should perform thorough research on a company before doing business. This includes, but is not limited to, the number of years they've been in business, the analysis of any performance records, consultation with other users of the trading system, requesting a trial (if offered).

Of course, not every trading business will be able to provide all of the information to make an informed decision. Even if a trading business does provide satisfactory evidence of performance, there is still substantial risk. Why? No one can truly predict the direction of the market. Even if a trading system has been over 80% accurate historically, the next second may be the start of a year-long downward spiral in which traders lose consistently. For this reason, a trader must only use "loss-capital" he or she can part with.

Day Trade to Win helps traders realize the risks in trading. As an educational service, traders are taught how to avoid some common, costly mistakes. Traders are taught to have a plan and how to operate trading software to potentially mitigate some risk. 

John Paul's Trading Tips and Tricks - Phantom Orders, Overbought Markets, and ATR

The E-mini S&P is John Paul's favorite market. Why? It's more predictable than other markets. Oil prices are globally manipulated - far more than the U.S. companies that make up the ES. Even with the E-mini, you can expect some crazy volatility with the upcoming, controversial U.S. election. You need to be able to quickly gauge market speed. The Average True Range (ATR) provides just that. With a period value of four, the last four candles are used to plot the green line you see on the bottom of the chart. Reading the ATR on multiple markets is not the same - you will need to move the decimal point if on the Euro FX. Generally, you want to trade between 1 and 4 points. Anything below or above is either too slow or too volatile. Avoid those constant losses and chop.

News events - almost every day, a news event has an impact on the markets. By using Bloomberg's news event calendar, you can know ahead of time whether an event will take place. Red star events are the big market-movers. Stay out of the market until the volatility subsides. Also, Fed Chair Janet Yellen's announcements can be just as influential. About five to fifteen minutes is what you will have to wait before things return to normal.

Another important concept - do not trust the buy and sell orders you see on the DOM, price ladder, or matrix. These numbers are manipulated by big firms and algorithms to make money off of each other and small, retail traders like yourself. John Paul calls these Phantom Orders. At one time, when this data could be trusted, traders employed a technique called tape reading to predict areas of support and resistance. Now, the numbers might as well be random. Let price action on the chart dictate your traders - not order info from the grid.

Finally, you must be able to assess whether a market is overbought or oversold. To do this, John Paul measures the distance between numbers, and candle closing price and wicks. With the Atlas Line, you can figure this out by looking at the space between the candles and the dashed line. Overbought/sold markets may appear they are volatile, but in reality, they are too exhausted to continue. During these periods, you are better off waiting until the market resumes normal volatility.

John Paul Reviews the Best Way to Tackle Day Trading for the Average Trader

Anyone can learn to become a day trader. To start with, you need a fairly new computer - one purchased within the last five years, at least. You need a stable Internet connection. You wouldn't want to be placing trades and then have your Internet cut out, leaving you at the mercy of the markets. Trading can involve sitting at a computer for over an hour at a time, so be sure to take breaks. In terms of a trading platform, leading day trading educator Day Trade to Win is fond of NinjaTrader. NinjaTrader provides access to futures markets at no cost. As such, a trader can practice trading for free. This experience is invaluable, because many traders are eager to trade with real money without a clue on how to proceed.

This is where day trading courses are important. Day Trade to Win offers the Atlas Line, Trade Scalper, and Power Price Action as separate courses. Each has a different style of trading. For example, the Atlas Line uses 5-min moves, fewer trades, and larger profit targets than the Trade Scalper. In comparison, the Trade Scalper uses 1-min charts, has up to 12 trades per morning, approximately, and has tighter profits and stop losses. The Power Price Action is similar to the Atlas Line in daily goals and charts, but the candle patterns are entirely different. Power Price Action also does not require any software - you can trade it manually, unlike the Atlas Line.

At the top of the list, the Mentorship Program teaches about 10 different trading methods. Each week, John Paul meets with his students twice to make sure they understanding each trading method. The training is progressive, starting with the ATO and moving through manipulation, the ABC method, the Roadmap, and much more. All courses and software are included. The licenses do not expire. Beginners and advanced traders have taken the coaching program and said that the material is different than anything they've seen before.