Why ATR is the ONLY thing I put on my charts — Transcript

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1. 0:00i think there is one part of the puzzle
2. 0:01that many people are missing including
3. 0:03me until recently volatility everything
4. 0:07is always moving but it doesn't always
5. 0:08move the same amount each day and we can
6. 0:11actually see this in real time
7. 0:13let me show you why i think your trading
8. 0:14isn't currently working the way it
9. 0:16should we are currently looking at
10. 0:18nasdaq on a 30-second chart from 11am to
11. 0:214pm
12. 0:22up until 1 30 where i have it hidden we
13. 0:24were getting around 5 points of movement
14. 0:26on each 32nd candle this is worth a
15. 0:29hundred dollars on the minis and ten
16. 0:30dollars on the micros ignoring outliers
17. 0:33the most we were really seeing was eight
18. 0:35points of movements on each bar and the
19. 0:37minimum was two points so 98 or so of
20. 0:40the time we could have expected a 30
21. 0:42second bar to move anywhere from 2 to 8
22. 0:44points this is normal for the nasdaq
23. 0:46right now when i'm making this
24. 0:48you can basically use this as a way of
25. 0:50gauging how long you'll stay in a trade
26. 0:52going for a one to one risk reward 10
27. 0:54point trade would probably keep you in
28. 0:56anywhere from 40 seconds to a few
29. 0:58minutes going for two points would stop
30. 1:00you out pretty quickly now something
31. 1:02interesting happened on this day when i
32. 1:04was trading this isn't just a video
33. 1:06where we go back in time at something
34. 1:07that's already happened and talk about
35. 1:09how to trade it nope in real time i saw
36. 1:12a massive candle happen that went 15
37. 1:14points in 30 seconds but this wasn't
38. 1:17like the other times where there were
39. 1:18outliers earlier in the day the next
40. 1:20candles were drops in price 10 to 12
41. 1:22points long so i did the smart thing and
42. 1:24went to check for news to figure out
43. 1:26what was going on
44. 1:27this was very erratic and unexpected now
45. 1:30looking at the whole right side from
46. 1:32where this huge volatility increase
47. 1:34first began you can see that the dot
48. 1:36clusters are way higher up than before
49. 1:39it went from a two to eight point range
50. 1:40to a three and a half to twelve point
51. 1:42range with many outliers above 14 points
52. 1:46so what does this mean for us
53. 1:48well i'll tell you what that's a bit too
54. 1:50volatile for me when i noticed that the
55. 1:52new average was twice as much movement
56. 1:54as before that's when i stopped sure you
57. 1:57might have the same trading
58. 1:58opportunities but it's literally trading
59. 2:01times too the same things are there but
60. 2:03they're going twice as far now that
61. 2:05means twice as much reward but it also
62. 2:07means twice as much risk
63. 2:09twice as many emotions maybe sort of i
64. 2:12don't know certainly scarier but i like
65. 2:14to look at the atr to see if maybe i
66. 2:16should just step back for a sec and let
67. 2:18things chill out it's the same reason
68. 2:20why i wait a little bit after the open
69. 2:22to start trading
70. 2:23especially with futures you could be
71. 2:25making or losing thousands of dollars in
72. 2:2720 seconds if you're not careful luckily
73. 2:30they have micros but still
74. 2:32even the microbes are moving a huge
75. 2:34amount in terms of monetary value when
76. 2:36volatility increases and atr shows us
77. 2:39exactly what volatility is doing in real
78. 2:41time i personally like the dot clusters
79. 2:44but some people like lines like this
80. 2:46whatever works best it's all the same
81. 2:48information now obviously you wouldn't
82. 2:51trade pre-market the same way you would
83. 2:53trade during normal hours
84. 2:55looking down below you can see that most
85. 2:56of these candles are ranging from 1 to
86. 2:594.25 points clearly your stop losses and
87. 3:02take profits would probably be smaller
88. 3:04since the chances of capturing a large
89. 3:06move are unlikely
90. 3:08i knew that yet somehow i wasn't being
91. 3:10dynamic with my trading style when
92. 3:12volatility was different during the day
93. 3:14moves are way different right now than
94. 3:16what they used to be and i'm not sure
95. 3:18all of the traders out there are
96. 3:19actually adapting to it i certainly
97. 3:21wasn't i keep hearing people saying that
98. 3:23trading is really hard right now and
99. 3:25part of me wonders if they have changed
100. 3:27with the times both your stop loss and
101. 3:29take profit levels need to match with
102. 3:31what's currently going on in the market
103. 3:33the charts always stretch out or become
104. 3:35compact to automatically fit on the
105. 3:37screen so we don't always visually see
106. 3:39when things are moving up and down more
107. 3:42we don't always notice that the
108. 3:43horizontal price bars are moving in much
109. 3:45higher or lower increments visually it
110. 3:48looks the same so the atr helps remind
111. 3:51us that things are changing price action
112. 3:53and structures might always be there but
113. 3:55their peaks valleys pullbacks and
114. 3:58breakthroughs change a lot so our price
115. 4:01targets need to match these changes and
116. 4:03atr shows us exactly by how much take a
117. 4:06look at this remember this is a 30
118. 4:09second chart and they're moving from 5
119. 4:11points to 14 points each
120. 4:13look at the candles
121. 4:15this chart looks the same except these
122. 4:18are only moving 2.5 to 7 points each
123. 4:21make sure your plans are changing too
124. 4:24when price action is half as much as it
125. 4:26usually is or twice or even three times
126. 4:29as much are you actually adapting to
127. 4:31this and monitoring for it are you
128. 4:33actually reducing or increasing the size
129. 4:35of your stop loss and take profit levels
130. 4:38for me this has been one of the most
131. 4:39significant impacts on my own trading
132. 4:41journey when something that's normally a
133. 4:44five point risk reward trade is the
134. 4:46equivalent of a 15 point risk reward
135. 4:48trade no wonder why i'm getting stopped
136. 4:50out struggling with the entries and so
137. 4:53on and so forth we have to adapt to the
138. 4:55changing market conditions in real time
139. 4:58each day
140. 4:59and atr shows you what you need to do
141. 5:02thank you patrons and good luck out
142. 5:04there everybody