Thursday, October 13, 2016

Multiple Ways to Manage Risk with Atlas Line

When the Atlas Line is added to your chart, you will begin to see the line and signals plot shortly after market open. The line is usually diagonal. With two closing candles above or below, a signal will generate (Dbl Bar Short or Dbl Bar Long). In this video, a Long signal is generated after two closing candles above the line when price is at 2152.75. You could certainly take this trade as you see it, but John Paul's approach goes a bit further.

In the included live training, he teaches how to assess each trade's risk. For example, if the distance between the recent candles and the dashed Atlas Line is too great, then the market is overbought or oversold.  Avoid these conditions. If the ATR is below 1 or above 5, the market is too slow or too fast. If a significant news event has occurred within the last 15 minutes or is about to occur, again, avoid trading. In addition, utilize multiple stop loss rules. The catastrophic stop can work as a safety net to catch the maximum loss. If price is not approaching the profit target, be prepared to get out early. With the Atlas Line, John Paul uses a prove-it stop and a time-based stop to close trades at a smaller profit, break even, or a loss smaller than the catastrophic stop. Lastly, be aware that price has a tendency to revisit previously reached values. There can be greater uncertainty when price reaches new highs or lows for the day, week, month, or ever.

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