Many traders ask me for good day trading and swing trading tips, yesterday I discussed the concept of positive expectancy and how you should always maximize your profits and minimize your risk. When used for day trading the formula simply changes the time frame from daily to intraday and the formula will take care of the rest.
If you were trading the E-mini SP Futures contract and you used a tight stop loss in January of this year you would probably do well but if you used the same type of stop loss in April of this year you would be stopped out before giving your trade the opportunity to work in your direction. What’s great about the ATR is that the numbers that are produced are based on actual dollar values of the market your trading. I hope these day trading tips will help you stay out of trouble in todays volatile markets. GOVERNMENT REQUIRED RISK DISCLAIMER: FUTURES & FOREX TRADING HAS LARGE POTENTIAL REWARDS, BUT ALSO LARGE POTENTIAL RISK.


UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING.ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY.
Imagine you are trading using an indicator like the RSI that gives you an overbought or oversold level.
SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. The only change I make is I average the last 10 days or trading bars while the original formula averaged the ATR for 14 days or bars.
I specifically wanted to use this example because you can see how the Index starts off with relatively low volatility and consistent trading range and in the latter part of the example you can see how the volatility picks up and the ATR increases simultaneously with the increase of volatility. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.


I discussed the ATR previously in past articles but I want to show you a real demonstration so that you can feel more comfortable incorporating this indicator into your trading plan. Thank God for electronic trading, imagine having to call the broker each time I make changes.



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