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.