If you’ve been waiting to see the ATO 2, Trade Scalper, and Atlas Line in live market conditions, here’s your chance. The video below is from a recent live webinar where John Paul shared his charts and went over this approach to trading the markets.
Early on, he covered the ATR (Average True Range) and how to use it to determine viable trading conditions. When the ATR is below one point on the E-mini, trading conditions are too slow. Above five points is too fast. Slow conditions also occur when many dojis or small candles appear consecutively.
If you look at U.S. overnight conditions, you will probably see such slow activity. The ATR is always looking backwards for its calculation, using the last X number of bars. John Paul usually uses a period value of four. Note that ATR values are different across markets.
Expect different price scales and some slight math to be involved if you want to determine viable conditions on the CL market, for example.
He also spends a good deal of time on the SuperDOM. The SuperDOM provides a listing of current buyers and sellers. For a historical representation, check out the Times & Sales feature. In most cases, John Paul ignores buy and sell data (Level II price data), preferring to look at candlestick patterns instead. Using a variety of mouse button clicks and keyboard shortcuts, you can place different types of orders.
This was discussed in my previous post. In short, you can place a regular market order, limit order, stop order, and market if touched order rather simply. The trick is knowing the differences among the order types and when to use them. Make sure you watch the portion of the video that discusses the correct way to close out trades.
Do you know what front-running is? You may have heard of it as a dirty tactic brokers use to extract money from traders who use their services. John Paul uses the term differently. To him, front-running is when you get out of a trade one tick earlier than the desired price.
Doing so may increase the chance of profit, as less market activity is required to reach the profit target. Of course, front-running leads to smaller profits, so you may only want to do it when trading a strategy that uses profit targets over a point. The Trade Scalper method is not as compatible with front-running as the Atlas Line, for example.
The video also discusses a number of other topics, such as overbought and oversold conditions, how to use the free news trading software, and much more.