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CFTC Rule 4.41: Hypothetical or Simulated performance results have certain limitations, unlike an actual
performance record, simulated results do not represent actual trading. Also, since the trades have not
been executed, the results may have under-or-over compensated for the impact, if any, of certain market
factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that
they are designed with the benefit of hindsight. No representation is being made that any account will or
is likely to achieve profit or losses similar to those shown.
Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An
investor could potentially lose all or more than the initial investment. Risk capital is money that can be
lost without jeopardizing ones' financial security or life style. Only risk capital should be used for trading
and only those with sufficient risk capital should consider trading. Past performance is not necessarily
indicative of future results.
Trade Results Disclosure: All trades presented are not traded in a live account and should be considered
hypothetical.
Trade/Training Room Disclosure: Presentations are for educational purposes only and the opinions
expressed are those of the presenter only. All trades presented should be considered hypothetical and
should not be expected to be replicated in a live trading account.
Testimonial Disclosure: Testimonials appearing on this website may not be representative of other
clients or customers and is not a guarantee of future performance or success.
FOREWARD ...................................................................................................................... 5
CHAPTER 1 ....................................................................................................................... 8
1.1 ABC Intro .................................................................................................................. 8
1.2 Getting Started Right ............................................................................................ 10
1.3 Tools of the Trade .................................................................................................. 10
1.4 What to Expect ....................................................................................................... 12
1.5 What NOT to Expect ............................................................................................. 14
1.6 What Are Your Goals? .......................................................................................... 14
CHAPTER 2 ..................................................................................................................... 15
2.1 Choosing Your Trading Platform ....................................................................... 15
2.2 Introduction to the SuperDOM (Price Ladder) ................................................ 16
2.3 Automate Your Profits & Stops ........................................................................... 19
2.4 Additional Resources & Training ....................................................................... 22
CHAPTER 3 ..................................................................................................................... 23
3.1 Price Action Explained ......................................................................................... 23
3.2 Candles or Bars? .................................................................................................... 24
3.3 What Markets to Trade? ....................................................................................... 25
3.4 Don't Fall in Love With One Market .................................................................. 27
3.5 Placing Orders ....................................................................................................... 28
3.6 More on the SuperDOM ....................................................................................... 30
CHAPTER 4 ..................................................................................................................... 33
4.1 Day Session & Time Zones .................................................................................. 33
4.2 ABC Chart Setup ................................................................................................... 36
4.3 Trending Markets Identified – How to Enter ................................................... 43
I have been trading for many years. Some years ago, I concluded that successful
trading is neither easy nor common. My experience helping people has further
confirmed this. If it was easy to be a profitable trader, far more people would be
in this line of work.
What you'll learn in this manual is a specific technique that's based entirely on
price action. The ABC Method's patterns are not based on conventional
indicators. To aid your finding of these opportunities, you will be applying
drawing tools, such as horizontal and vertical lines, to your charts. Most charting
platforms allow you to add these drawing tools quickly, by the way.
This guide explains the ABC Method with full objectivity, including entries,
stops, and trade management. You can use the ABC Method as a standalone
system or in conjunction with your own trading strategies.
Traders throughout the world use the ABC Method on different markets and on
different trading sessions such as the London and Asian sessions.
But even after you learn any of our trading method, you must remember to
practice first—before risking any of your money! I cannot stress enough the
importance of starting off with paper (real-time simulation) trading.
You can use demo mode or simulation mode if your trading platform offers it
(most do), and once you are ready to begin trading earnestly, your outcome
should be better.
https://daytradetowin.com/paper-trading-simulator
Before you begin using any trading strategy, make you have established a strong
foundation of trading basics. Regardless of your experience with other trading
software and skill level, take time to learn the features of the trading platform
you'll be using (e.g. NinjaTrader). We don't want you to click the wrong button
or make a rash decision in the heat of the moment. Rather, experience and
practice will allow you to flow comfortably and seamlessly through your trading
platform.
If you would like to learn more about day trading, including learning how to
scalp trade the markets, trade the open, or go even further in becoming a trading
pro, visit our website:
https://daytradetowin.com
For those of you who want to learn as much as possible as soon as possible, we
offer an 8-Week Mentorship Program that includes all the courses and software.
Mentorship guides you into becoming a professional day trader.
The ABC method does not. The idea of using the price, the time, and objective
rules to understand how to enter and exit the market is the foundation of price
action trading. What about adding a bit of MACD or stochastics? There is no
need. We are just using price action! Even when we apply the ATR (Average
True Range) using a period value of four to determine the profit target and stop
loss, we are still using price action.
Yes, the ABC Software does exist. It is included with the 8-Week Mentorship
Program offered at DayTradeToWin.com. The ABC Software plots entry signals
and shaded regions on the chart. However, the ABC Method you'll soon be
learning here can be traded manually.
Is the market trending? Is the day trading in a tight range? Is there a late-day
rally or sell-off? Is it even worth trading as the condition may be risky and not
worth trading?
These are the questions I intend to answer in this course. You will have a clear
understanding of where to enter and exit each trade.
You will also understand the market's direction, long or short, or even when the
market has no direction to speak of.
Start with a market you can easily identify with. My recommendation is to start
with a futures market such as the E-mini S&P or something similar like Nasdaq,
Dow, and even the micro versions like the Micro E-mini S&P.
Of course, you are welcome to experiment with currencies, forex, crypto, and
stocks.
The rules for different markets will be similar if not the same. Not all markets
have the same trading hours and start times, so pay attention to the start times of
the markets you trade.
Yes, the rules and the ABC Method work the same way. Later on, you’ll see
charts for the London session.
Price and time make up the signals, the trade management, and the functionality
of what you see plotting on the chart. Focus on price and time. The best trades
will present themselves.
My goal here is to start you off fresh using price action—even if you have been
around the block, tossed in the gutter, and forced to crawl back to your
computer.
All is not lost, and for the newbies in the trading world, listen up and learn from
the old-timers who have made these same mistakes on more than one occasion.
To start off right, view your trading education as something that is meant to
last—as if it's your primary and only business. Treat it as such by creating a
professional and calm home or office environment. Find a space without
distractions where you can concentrate on the task at hand.
1. A computer. Get yourself a good computer! It's a good time to buy; prices
are low, and deals are everywhere. If you intend to make good money,
lose the old laptop and grab yourself a newer machine. Get a computer
with an SSD (solid state drive) and at least 8 G.B. of RAM. I can't live
without my multiple monitor setups, but if all you're doing is scalping the
markets, then one monitor will do.
3. Reliable, high-speed internet. You won't need the fastest internet access.
At present, the average download speed in the U.S. is 10 Mbps. That's
plenty good for our style of trading. What is more important is that your
internet is stable—there's no package loss or regular outages. Wi-Fi should
be fine, but if you are sharing internet with your family and they're
streaming various video services, your performance could be impacted. In
that case, consider upgrading your internet speed, Wi-Fi router hardware,
or installed a dedicated connection just for trading.
4. A trading platform. A trading platform is the software you use for trading.
It contains the charts and the trading dome where trades are placed. It also
receives the market data that is displayed on the charts. You have a variety
of options when it comes to your trading platform or software. I prefer
NinjaTrader. In my experience, as a teacher, my students have said after
spending some time with it, it's easy to get the hang of. There are plenty of
other platforms out there. Remember, price action can be traded on any
charting software.
6. Access to a financial calendar for news events and reports released to the
public. See https://daytradetowin.com/trading-news.
Your intention is probably to make money. But how much, how quickly? By all
means, you can have intentions to manifest abundant wealth in your life. But,
should you experience some losses early in the process of learning, will that
deter you from pushing forward? This is why you may want to take a reasonable
approach and be patient with yourself, especially during the learning process.
Your expectations should be relevant to many factors: your account size, number
of contracts traded, and trading frequency. Here are some general expectations
that should be set before you start trading with any method, including the ABC
Method, Trade Scalper, or Atlas Line:
• Wait for the best trades. Avoid overtrading. Thus, limit the total number of
trades for ALL strategies you trade to 2–6 per day.
• Depending on your time zone, you can trade the evening U.S. session.
• Trailing stops are great and are best suited for trending days.
• Using the primary entry (or signal if using the ABC Software), refer to the
ATR to determine the profit target.
• You should expect to trade the method on multiple markets, not just the E-
mini, currencies, or other financials.
• Considering limiting further trades for the day once your profit objective
has been reached.
• A winning trade 100% the time. This is unreasonable and is never going to
happen with any system or model. Some trades will be huge winners but
expect small wins, break-evens, and occasional losses to occur.
Practice trading with the intention to accomplish those goals. Continuing your
trading education is essential. Learn what works and what doesn't. Combine
new methods: use them as filters to help rule out or confirm potential trades.
Regardless of your experience level, there is always something new to learn.
The ABC Method can be traded every day. If you have different goals, such as
trading just once per day as taught via the ATO 2 course, then stick to that goal.
If your goal is to scalp the markets daily for $100 daily or $500 using the Trade
Again, you should be realistic in your goal-setting and have your intention(s)
goal(s) established before trading or sitting down in front of your computer.
Many traders will start with unrealistic goals. Another mistake, at least in my
opinion, is to change goals to unrealistic, greedy levels after finding some
success.
CHAPTER 2
NinjaTrader offers a great and useful feature called Chart Trader. Using Chart
Trader, you can place trades directly on the chart without having to use a
separate SuperDOM window aka price ladder.
As price moves, we can actually click on the order and drag it near the current
price. As soon as the price touches the order, we want to click once, and the fill is
hit.
Another nifty tip is that you actually can place orders by right-clicking on the
chart. With your sim account, try it and see what options are available and how
you like it.
If you're using a platform other than NinjaTrader, look for similar futures. Most
platforms have some sort of price ladder.
In the center, price of the instrument (aka market) is continually moving up and
down. We can get a sense of actual trades being filled in real-time—the quotes on
the DOM move in conjunction with the price on the chart. You should set up
your screen to include the DOM directly next to the trading chart, side-by-side.
The DOM consists of three columns. The current price is displayed in the center
column. The Buy and Sell columns are situated on either side of the price
column. The left column is the DOM's "buy side." The right column is the DOM's
"sell side."
Similarly, the right sell-side is for going short ("selling the market"). You would
place an order to enter the market, anticipating a down ("bearish") move. The sell
column is also used to exit a long (buy) position and either take profit or a stop.
In other words, after placing a sell trade, exiting the trade requires placing a buy
order on the opposite (left/buy side).
If the above sounds confusing, you will soon learn how to use the ATM Strategy
feature which automates the placement of the profit target and stop loss.
The ATM Strategy allows you to automate your exits by having the trading
platform (in this case, NinjaTrader) execute them for you. You would configure
the number of ticks on the profit side and the number of tics on the stop-loss side
you want the trade to execute. As soon as you place a trade long or short into the
market, the opposite side of the trade is placed for you automatically.
You have already configured the ATM Strategy by inputting the number of ticks
in profit and the number of ticks in stop that you want to take on each trade.
You place the trade long or short, either on the chart or on the dome. Within
seconds of being filled on your entry into the market, your profit targets and
stops are placed for you on the exchanges. This now saves you from having to
place those exit trades yourself manually.
Electronic markets are first come, first served. Thus, you are placed in line to be
filled. Now, do you understand why it's so important to be first in line when
exiting or placing trades? Your Limit or MIT orders are placed for you. The ATM
Strategy feature can help you get ahead of the pack in this regard.
On the following page, Figure 2 provides an example of the DOM and ATM
Strategy hard at work. As always, you should practice trading in
demo/sim/paper mode before going live with real money.
For a broader and free education, I have put together a variety of helpful
resources for you to use. Please take full advantage of them and may they help
guide you on your trading journey.
If you've already purchased one of our trading methods such as the Trade
Scalper, ATO 2, Atlas Line, or 8-Week Mentorship, you can find a collection of
helpful videos on the Member Home page. You should have been provided a
link to the Member Home page with your purchase.
Alternatively, you can find some of the same content via these links:
Also, NinjaTrader provides free learning resources, webinars, and support for
their platform. Visit https://ninjatrader.com/PlatformTraining for details. Their
support email is platformsupport@ninjatrader.com. If you have a question
regarding your connection with NinjaTrader or trading account, contacting your
broker may be best.
When learning, please have patience with yourself and take time to practice.
I am the kind of trader that follows price and price only. Hence, when I trade, I
only want to look at the exact price plotted on the charts.
The price goes up; the price goes down—price does its seemingly random dance
all day and night. Regardless of what price does, again, I am looking at only the
exact price being plotted on the charts. It doesn't matter if you are looking at 1-
minute, 3-minute, 10-minute, hourly, daily, or tick charts.
Price is the price. Whatever and how-ever the price plotted on the charts, that is
what I watch.
If you like bar charts and have only bar charts on your trading platform, then it's
price action you are watching. If you like candlesticks instead, you are still
watching price action.
There are many ways to observe and interpret price action. Some work better
than others. I recommend that you stick to the rules of tried-and-true price action
trading methods.
I continue to use candlestick charts. It's not just about the pretty red and green
colors (even though I do admit I like the style). As price flows on the chart, it's
about readability, interpretation, and quick decision-making.
There are names for certain types of candles that appear on candlestick charts.
For instance, shooting stars, hammers, and dojis are just fancy terms to recognize
a candlestick formation. You can call those patterns anything, but more
importantly, they all have one thing in common—they are all forms price action
interpretation.
It's actually not that difficult to determine a good market to trade. Most traders
prefer one with high volume, low commissions, enough movement for intraday
profit potential, liquidity allowing quick entry and exit, and just enough
volatility to make it all manageable. In addition, the market needs to be
accessible within your trading platform of choice.
What tends to meet all the above criteria? The E-mini S&P 500 (E.S.). Yes, we
also have the E-mini Dow (Y.M.), E-mini NASDAQ 100 (N.Q.), and E-mini
Russell 2000 (RTY) available. Somewhat recently, new Micro markets have been
created. Also, crypto trading is now more accessible than before. Take a look at
the Euro Futures (6E), FESX, and FTSE 100 markets as well, especially if you are
trading outside of regular U.S. day session hours. Indeed, there are plenty of
options.
Again, I prefer the E-mini S&P 500 because I believe it provides a great bang for
the buck.
I feel it's better to stick with what has been known to work rather than go
treasure hunting for an exotic market on the same paths that are frequently
traveled by other trading explorers with similar goals.
*Futures currencies are regulated and traded in the U.S. Forex, on the other hand,
is unregulated. If you want to trade futures currencies, here are some that I
believe work best (in no particular order):
• U.S. Dollar
• Euro Dollar
• British Pound
• Canadian Dollar
• Australian Dollar
• Japanese Yen
• Swiss Franc
Many traders make the mistake of concentrating only on one market and living
and dying by what occurs in that one market. Branch out. Try to have a few
trading eggs in other baskets. If the market you love so much suddenly changes,
you would find yourself confused and lost. The exchange might impose new
rules on point values or how orders are managed. Some time ago, T-bonds went
through changes that affected how the point value was calculated. If the T-bonds
were all that you knew—and nothing else—then you may find yourself in a
predicament.
If you currently trade the E-mini, I recommend that you try a currency. See the
prior chapter for details. If anything, you will be able to gain the experience and
know-how if ever the E-mini ran into trouble. You should also be aware that at
certain times of the year, the E-mini slows down, and trading becomes more
difficult. An example would be the last week of the year for the financials—not
the best time to trade. In this event, you could switch to currencies until the
financials get back to trading normally.
Remember, the markets work in cycles. If you are trading one market that turns
too slow or too fast to trade, switch to another market. If you have two stops in a
row, the market you are trading may be in a tight chop or whipsawing for the
day. You have options. Look to switch markets or trade multiple markets at the
same time.
Types of orders:
• Market order – enter or exit into the market immediately at the current
market price. Market orders are prone to slippage (i.e. not getting the price
you want), and that's not a good thing. Avoid using when the market has
higher than average volatility. Market orders can be thought of as, "Just get
me in or out regardless of the price."
• Market if touched (MIT) – as soon as price touches the MIT order, the
order becomes a market order. Slippage can occur using MIT orders. MIT
orders are performed by holding Ctrl and left-clicking.
• Stop order – a stop order is an order to buy or sell a security when its price
moves past a particular point. Beyond that price point, stop orders are
converted into market orders that are executed at the best available price.
Slippage is expected to occur. Use the middle mouse button (likely a wheel
on your mouse) to place this type of order in conjunction with the
SuperDOM.
We cover order types and placement further in a training video that is made
available within your Member account. If necessary, please review that video. In
addition to our videos on the subject, you may want to view NinjaTrader's
content at https://ninjatrader.com/blog/how-to-use-the-superdom-price-ladder-
for-order-entry/.
The order types discussed in the prior section are directly placed using a
SuperDOM.
To become familiar with placing orders, you should practice in simulation mode
first for a good amount of time.
What you should notice and practice when using the SuperDOM in simulation
mode:
If you are using TradeStation, TradingView, or any other charting platform, the
same settings are used, the data shown should be identical, and the trading rules
are executed the same way.
1. Identify the start time of the trading session. The start of the trading
session is also known as “market open.” The market open time can vary
among instruments.
Another way to find the market open time is to look for the Day Session
Start Time. These terms are interchangeable.
2. Markets that trade 24 hours also have a day session start time. In fact,
you can even say they have two session start times: the day session and the
Globex after-hours session. We are only focusing on the day session start
time for the ABC Method calculation.
Volatility is almost always higher during the day session. We require the
market to be at its most active to identify trends and opportunities for the
ABC Method. The after-hours, or Globex session, is often slower with little
movement which makes it difficult to trade.
3. Pay close attention to your time zone. Your time zone dictates the market
open time locally for you. In the following examples, I will use “EST” to
represent US/Eastern Standard Time. Keep in mind, if you are in the U.S.,
depending on the time of year, EDT (US/Eastern Daylight Time) may
apply. A global list of time zone abbreviations is here:
https://www.timeanddate.com/time/zones/.
As an example, think of a trader who lives in New York. She resides in the
EST time zone. For her, the E-mini S&P, the day session begins at 9:30 a.m.
Another trader who lives in Chicago experiences the US/Central time zone,
which is an hour “behind” US/Eastern. Thus, this trader’s market open is
8:30 a.m. locally.
Because seasonal U.S. time changes do not match time changes observed
elsewhere in the world, if you are outside of the U.S., you may want to use
a time zone converter to determine what your local time is relative to
US/Eastern time. Note: if you use our ABC Software, you will need to
input the market open time in local time (24-hour format).
Anyway, to get to the point, your job is to know the day session start time
for the markets you intend to trade based in your local time zone.
Figure 6: Day session market open for the E-mini S&P in US/Eastern time.
The rules you are about to learn are the same for different markets. However,
some adjustments may be necessary for markets with fewer trading hours as
compared to the E-mini.
For most markets, Part A begins at market open is consists of the first 2.5 hours
of the trading day. This A section is important because it often contains greater
volume, news releases, and large up and down moves (volatility).
During Par A, day traders, swing traders, and position traders begin adding
positions. They push the market with big money activity.
If needed, scroll back over multiple days with an Average True Range (ATR)
indicator applied to the chart. The ATR should display spikes corresponding to
the sizes of the bars/candles. This is how the ATR further confirms the high
volatility often observed in the A Section.
Part A defines important support and resistance. This support and resistance are
outlined by the highest high price and lowest low price within the first 2.5 hours.
1. Using a 1-minute or 5-minute chart, add a vertical line to the chart at the
market open time. For example, if your computer time is set to US/Eastern,
place a vertical line at the 09:30 time on your chart.
2. Add another vertical line to the chart 2.5 hours later. If you are US/Eastern,
this would be 12:00 p.m.
4. Identify support by adding a horizontal line at the lowest low price for
Part A. Include the start and ending candles if they contain the lowest low
price.
By the way, if you cannot find the horizontal and vertical line tools in
NinjaTrader, look for the pencil icon at the top of the chart. Memorize the
keyboard shortcuts if you’d like.
Part A creates an important range that we use as we enter Part B. Take a moment
to imagine that the support and resistance defined in Part A are major hurdles
the market could break in Part B. If within Part B, price breaks out of Part A’s
support and resistance range, we consider the day to be a “trending day.”
Part B: begins 2.5 hours after market open; duration: 2.5 hours
Part B is the “middle portion” of the trading session. It consists of the next 2.5
hours starting at the end of section A. For those in US/Eastern trading the E-mini,
the B session ends at 14:30 p.m.
In other words, while in Part B, we use A’s range to help identify opportunities.
More on that in a later chapter. For now, we’re just focused on identifying the
highest high and lowest low ranges for reach section.
Part C is the final portion of the trading session. It consists of a smaller time
frame. For the financials and the E-mini S&P, the next hour and 45 minutes make
up Part C. C begins where B left off and runs until the end of the session.
Part C tends to be slower than A, but there are some advantages. The expectation
for C:
In Part C, if price breaks through the highest high or lowest low of Part C, you
may soon be looking at an entry opportunity. Again, more on that later.
However, under normal conditions, the market fizzles out into the close unless
news or other profit earnings information is released, thereby causing the late-
day rally/breakout to occur.
In the next chapter, you will learn how to enter the market based on the
breakouts. You will also gain a greater understanding of support and resistance.
The following examples show the E-mini S&P’s Part C. Again, remember to
adjust for your time zone if depending on your computer’s local time and the
market open time for the market you’re trading.
Part creates big moves based on volatility. By the way, trading the Atlas Line,
ATO 2, or Trade Scalper is a good way to take advantage of these moves.
According to the ABC Method rules, there are no entry opportunities in Part A.
The entry opportunities occur in parts B and C.
After Part A concludes, Part B becomes the focus for the first entry opportunity.
Now, Part B.
As such, these two situations allow us to use the following price action rules to
objectively identify price action opportunities based on clear, objective rules.
As soon as Part B begins, we use the A’s range to determine if price is continuing
to push beyond the high or low of A’s range. If there is a push, this indicates a
TREND is forming.
After entering the market as a buyer or seller, the following rules should be used
for trade management, including stops and targets.
Remember that your ATR indicator should be configured using a period value of
4. This means the last four bars/candles are used to calculate the current ATR
value.
1. Exit and take profit after the market makes a profit target of 1x the ATR or
greater. Use an MIT or Limit order.
2. Trail a stop and hold the position until the close. This should allow for
larger profit potential due to the establishing of a trending day.
3. Before the end of the day, trail a stop for 2x to 3x the ATR.
4. Close the trade or apply a “Prove-it Stop” if, after entering, price closes
back within the range of A. This “proves” the trend is not continuing, thus
you should be out of the market.
5. Close the trade or apply a stop loss if the market trades sideways after the
A breakout and does not continue in your favor for a profit at the end of
the B range period.
6. The stop loss should never be larger than 2x the ATR and never be larger
than 5 points (20 ticks). This is called the “Catastrophic Stop” and it is the
last resort.
Figure 10: Example of a trending day where two consecutive candles close
above A's highest high.
…Remember, the earlier the breakout occurs in B, the better the trade and
“proof” the day is trending!
Figure 11: An example of a range-bound day. The market never traded beyond
the range of A. This occurs about 80% of the time.
Recall that Part B is 2.5 hours in duration. It’s typically slower than A unless
there’s a significant trend in play.
During Part B, you can use the Atlas Line, Trade Scalper, Blueprint or other
methods we teach to take advantage of additional opportunities and filter.
As such, these two situations allow us to use the following price action rules to
objectively identify price action opportunities based on clear, objective rules.
As soon as Part C begins, see if B’s high or low is being surpassed. If so, there
may be a RALLY or SELL-OFF in effect.
Remember that your ATR indicator should be configured using a period value of
4. This means the last four bars/candles are used to calculate the current ATR
value.
1. Exit and take profit after the market makes a profit target of 1x the ATR or
greater. Use an MIT or Limit order.
2. Trail a stop and hold the position until the close. This should allow for
larger profit potential due to the establishing of a trending day.
3. Before the end of the day, trail a stop for 2x to 3x the ATR.
4. Close the trade or apply a “Prove-it Stop” if, after entering, price closes
back within the range of B. This “proves” the trend is not continuing, thus
you should be out of the market.
5. Close the trade or apply a stop loss if the market trades sideways after the
B breakout and does not continue in your favor for a profit at the end of
the C range period.
6. The stop loss should never be larger than 2x the ATR and never be larger
than 5 points (20 ticks). This is called the “Catastrophic Stop” and it is the
last resort.
On the next page, you’ll see another example of the ABC Software in action. You
may easily identify the opportunities yourself by drawing lines or shaded
rectangles. The ABC Software does it automatically and provides Long/Short
signal text with the corresponding entry price.
Figure 12: Late-day rally, which can only occur in Part C which is at the end of
the trading day.
Figure 13: There was no entry opportunity in Part C because price never closed
twice outside the range of B. Indeed, the day was without any major rally or
sell-off.
Did you notice how the high and low of the A range is tested during Part B?
Knowing this occurs more often than not, we look for an opportunity to allow
the market to trade, test, and bounce off the high and low of Part A while trading
in Part B.
The entries are a little different, but using price action will help guide you…
As soon as the Part B begins, use A’s range to determine if the market is
continuing to push beyond A’s high or low OR is instead bouncing off the highs
and lows as if testing A’s range.
• The entry opportunity occurs when one candle closes outside the A range
and the next candle closes back inside the range. In other words, an order
to buy or sell can be placed at the close of the second bar, which closes
back inside the range of A.
• The rules are the same on 5-minute and 1-minute charts.
• The two consecutive candles that flip-flop can be bullish, bearish, or doji,
as long as they are consecutively closing outside and then immediately go
back inside the range as if bouncing back.
• The two candles referenced as bouncing off the range of A should occur at
the beginning of the B range and not towards the end of part B.
• The same idea occurs when comparing the range in B to the way the
market trades in the C part of the day.
• Support and resistance can be easily identified using this bounce-back
feature when comparing Parts A and B and Parts B and C.
In Figure 14, notice how the candles in Part B “bounce” off A’s lowest low. One
candle closes below the range of A. The very next candle closes back within A’s
range. Therefore, we can assume the market is testing A’s lowest low and
bouncing back up.
1. Exit and take profit after the market makes a profit target of 1x the ATR or
greater. Use an MIT or Limit order.
2. Trail a stop and hold the position until the close or until reaching the other
side of the range. This should allow for larger profit potential.
3. Before the end of the day, trail a stop for 2x to 3x the ATR.
4. Close the trade or apply a “Prove-it Stop” if, after entering, price closes
outside the previous range. This “proves” the trend is not continuing, thus
you should be out of the market.
5. Close the trade or apply a stop loss if the market trades sideways after
bouncing and does not continue in your favor for a profit.
The ABC Method does not “care” about the session. The rules are the same
regardless of your choice to trade the day U.S. session, the London session, or
even the Asian session.
For every market you want to trade, be sure to check start times, hours traded,
etc. as these times can change and may differ relative your local time zone and
season.
On the following pages, I have two more London session charts for you.
By the way, the great thing about price action trading is the applicability and
adaptably among various markets. I hope the power of price action has become
evident as you finalize your understanding of the ABC Method.
I truly hope that your trading greatly improves and you find much prosperity
and abundance in your life.
I have more methods to teach you. All can be found here. you want to learn
everything in one comprehensive package with eight weeks of live training, the
8-Week Mentorship Program is the best choice. I have also placed some clickable
images on the following page.
John Paul
Risk Disclosure: Futures and forex trading contains substantial risk and is not
for every investor. An investor could potentially lose all or more than the initial
investment. Risk capital is money that can be lost without jeopardizing ones'
financial security or life style. Only risk capital should be used for trading and
only those with sufficient risk capital should consider trading. Past performance
is not necessarily indicative of future results.
Trade Results Disclosure: All trades presented are not traded in a live account
and should be considered hypothetical.