One of the best ways to help simplify and automate your trading is with an ATM strategy. ATM stands for “Automatic Trade Management”.
Here’s Why You Should Set Up An ATM Strategy For Trading the Momentum System
First of all, it’s a good idea to have your stop placed immediately and automatically, whenever you enter a trade. This protects you from catastrophic loss in the event something unexpected happens before you’ve had a chance to manually place your stop-loss. The last thing you want is to be in a trade without a hard protective stop in place. Anything can happen, especially in a fast market.
An ATM strategy keeps you from second-guessing your trade and changing your mind.
The simple ATM strategy shown below will allow you to easily trade the Momentum System “purely mechanically” and save you a TON of time – trying to manually place stops and targets after you’ve entered a trade. It will also prevent you from making order execution mistakes (we’ve all had that happen).
Another good reason to have an ATM set up is that the market can move fast. In the blink of an eye – before you have time to react – price can spike and you missed out on taking profits at Target 1.
Big Price Moves “Out of the Blue” Are Common
We’ve all seen it happen – the market is coasting along and everything looks normal – then all of a sudden a news item hits the tape and the price jumps or plunges in an instant. If you don’t have your Targets and Stop already set by your ATM strategy then you just missed out. Sometimes price spikes reverse just as quickly as they started and there’s very little time to react. On the flip side the sudden price move could go against you with catastrophic results. It is simply not worth taking the risk of being in a trade without already having your Stop and Targets in place – set by your ATM strategy.
Using an ATM strategy will ensure that you have your stop and targets in place – even when a move happens quickly. Every experienced Futures trader knows that the price can move faster than you can react – using your mouse.
How to Set Up An ATM Strategy in NinjaTrader 8
Here is the default ATM strategy for trading the Power Emini Momentum System. This simple ATM strategy uses 2 contracts and just sets your initial Stop and 2 (staggered) Targets when you enter a trade.
The ATM pictured below sets your initial Stop 10 points away from your entry – then you simply drag the stop on the chart to the correct level that the software shows you. The 2 targets are staggered 32 ticks (8 points) and 48 ticks (12 points) so that you will have 2 separate lines on the chart that are easy to drag to the Targets displayed the Alert Software.
I like to use 10 points above or below the entry for the ATM stop because that gives you plenty of time to adjust the stop without it getting tagged in a fast market before you’ve had time to adjust it. It’s a good idea to drag the initial stop to the correct location the Alert Software shows first – and then adjust the Targets afterwards.
The Alert Software will show the exact price levels for your Stop and Targets – the ATM simply gets them “staged” the moment you enter a trade.
Final Thoughts and Summary:
We’ve all had a trade open and experienced a sudden price movement – where there’s little time to react – and you are forced to make snap decisions. Having a pre-planned trade using an ATM strategy will give you peace of mind. The biggest benefit of using the ATM strategy is that you can trade consistently. In other words you are using the same mechanical strategy – and not just trying to “wing it”. It will bring consistency to your trading.
The main takeaway here is that you want to start using an ATM strategy and it will increase your odds and eliminate execution mistakes – and having to make snap-decision judgement calls.
It only takes a few minutes to set up your ATM initially, but it facilitates trading the Momentum System immensely.
PowerEmini Automated Alert Software For Day Traders