August, 2016 has been a slow month for the E-mini and many futures. Slow markets are a problem for traders. DayTradeToWin has an answer. When the ATR (Average True Range) is below a point, there’s often chop. With chop, price easily retraces. This means greater risk and losing trades. Instead of succumbing to these conditions, John Paul shows alternatives trading strategies. For instance, the ATO (At the Open) strategy is used to find the opening move. In the morning, the E-mini is most active with a consistent direction. Once you are aware of how to find the price level and pattern that constitutes an ATO trade, you will know how to deal with a market that may be slower later in the day.
At about 15 minutes into this video, John Paul shows how the ES becomes active at market open. Markets often test (that is, go back to) levels they’ve previously reached. Retracements and stalling markets may well occur after the morning push. Usually, by 12 p.m. US/Eastern, any market open opportunities have ended.
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Getting a fill is also a problem when a market is slow – price touches your profit target, and you don’t get a fill. Again, the ATR is useful for assessing volatility. At about 18 min. into the video, John Paul shows you how he reads the value. The green line on the bottom of the chart indicates ATR movement. Note that a value of four is used. This means the average of the last four bars decides the new value. Getting out using a stop loss is be tricky. John Paul recommends using multiple stop losses. A catastrophic stop is the maximum value you’re willing to lose on a trade. A time-based stop is the maximum time you want to stay in the market (usually 20 min., or four bars on a 5-min chart).
Back to the ATO. Sometimes, there is only an entry signal, but no fill. Under the right circumstances, the ATO provides additional long or short signal to still get you long or short even though the initial fill did not occur. In the video, this is explain at about 29 minutes. This secondary trade, placed using a stop with limit, provides a greater chance of getting a fill. Consider this secondary “Chase the Trade” an additional entry opportunity if it occurs before noon, US/Eastern on the E-mini S&P.
By the way, DayTradetoWin offers a free NinjaTrader download. Also available, a Get Started Trading Guide, walks you through the process of setting up your charts and trading basics.