This is a more recent demonstration of one of the free trading techniques – the ABC Pattern mentioned on the DTTW trading videos page. You can trade this ABC strategy on stocks, commodities, forex, and other markets. On the given day, price was trending – heading in a steady direction. If you can know in advance with reasonable certainty if price is likely to head higher or lower at a given time, you can position yourself to make profit. The ABC pattern splits the day into three segments – morning (A), early afternoon (B) and late afternoon (C). By referencing what price did in the A part of the day, you can get an idea of what will occur in the B part of the day. The same holds true for B and C. Each part has its own characteristics. At market open in the A part (9:30 a.m. to 12:00 p.m.), automated systems, swing traders and large financial institutions create volatility. In part B (12:00 p.m. to 2:30 p.m.), have an expectation that the market will slow down. At the C part of the day (2:30 p.m. to 4:30 p.m.), expect a late day rally or sell-off. Watch the video so you know how to draw the breakout lines at the correct price points – lowest low and highest high in A followed by two consecutive closes above or below the range you’ve defined in A. However, this breakout is not likely to happen, as B is less active. Whipsaw price activity – back and forth movement, is more likely to occur. Watch the video for the rules of trading section C, as the rallying or sell-off will likely add volatility / tradability back into the picture.
Yesterday, the E-Mini unexpectedly fell quite a few points. In the video below, you can see the huge move down as indicated by the large red candle. With two consecutive closing bars below the Atlas Line, the Atlas Line generated a Dbl Bar Short signal at 1151.75. If you were using the Atlas Line and took this trade, it would have worked in your favor all day (with the exception of price starting to intersect the Atlas Line near market close). With price well below the Atlas Line, we know to stick with Short trades. There are a few trade types that can be used based on the Atlas Line: the Pullback Trade and the Strength Trade. These help in recognizing profit opportunities as the market flexes back and forth under a general trend. John Paul, day trading coach from Day Trade to Win can easily point out three pullback trades. Recognition of these setups is taught in the live training that’s included with purchase of the Atlas Line.