Average True Range and Dollar Index Futures Strategy

– Average True range and the Dollar Index

o Dollar index:

 Negative correlation
 When the dollar moves everything else moves
 We know when the dollar is flat everything else is flat
 We also know that when the dollar tests highs/lows the rest of the markets tend to jump
 Stay away from narrow trading range on the dollar

• Avoid the market when its tight and narrow
• I look forward to trading when the market is wide and moving

 We do not trade the dollar, because its volume is too low
 Most important thing to watch on the dollar:

• Average true range

o When the dollar is narrow everything else is the same

o Average True Range:

 Most important thing to watch is rising vs. falling
 I don’t care what the reading is
 I care if we’re rising or falling

• Are we higher or lower than we were 5min ago, an hour ago, a day ago, a week ago?

 Where are we in the recent trading range

• Are we at the highs?
• Are we in the middle?
• Where will there be NEW HIGHS/LOWS?

– When does the US go to Daily Savings Time

o Next Saturday
o This is different this year b/c of the Red trying to save on energy consumption

– Pace of Tape Indicator

– Why don’t we trade the DAX much anymore?

o After 2007 the DAX lost ALL of its volume
o The personality is completely different than what we saw and grew to LOVE < 2007
o The DAX was best known as a ‘back-box market’

 All the higher risk speculators were putting their money in the DAX

 Then after the ‘credit crunch’ the market’s participants took all the money from DAX and moved it into more stable markets

• ES (US)
• FTSE (UK)
• FESX (Germany)
• Crude oil
• Gold
• Wheat, Soybeans, Corn (ags)

o The main reason why I don’t trade it here in the room

 Margins are at least $2500usd
 Cost / tick = $25eur per point

• $37usd per point
• Very expensive market to trade

– What different indicators do we use

o The beginner’s course has all the info on this

– Drawing Tools

o Review more of this on Friday morning in beginner’s training

– Fast Track Method

o Low Risk/Reward Ratio
o Uses Limit Orders to enter the trade
o Uses the simplest patterns to make learning and earning easy
o Intended to build solid trading habits

 Patience and discipline
 Reading tape
 Reading the speed
 Learning our high % patterns
 Never giving up on a trade

– What are the auto levels and what do the colors mean?

– Automated trading

o Released by the end of the year (my goal)
o Ideally we’re waiting on the final version of NT 7.0 to be released.
o Drawdown

 When automated trading continues to take losing trades
 The amount of drawdown is hard for a day trader to watch

– How does trade management differ for 4-range to the 13-range and on?

o Scalping on the 4-range charts uses the standard scalping trade management
o 13-range chart will use different trade management than our scalpers.

– As a member will I have YOUR charts?

o You will have the SAME charts and SAME market data that I use, it will be on YOUR computer

– What made me chose these timeframes?

o These are the timeframes I see the best patterns
o Some are fib numbers
o Using the 144t = trade management chart