This page will provide all the information you need to get started trading the brand-new PowerEmini Micro Trader 20 System
If you are new to Power Emini and are focused on trading ES (or MES) we recommend you start off with the MT20 System. It’s one of the easiest strategies in the software to trade and it’s honestly a LOT of fun! The MT20 System runs on the ES-20 Tab in the Alert Software so just click the Settings Button and check the box 20-Min Micro to enable the tab.
Watch This Video to Learn How to Trade with the MT20 System
A video introduction to the brand-new MES / ES 20-Minute Scalper Algo.
Why is it called the Micro Trader 20 System?
Because we are zoomed into the price action and trading at the “micro level” using a 20-second chart – and the system generates a new Dynamic Trigger Range every 20-minutes.
A New Dynamic Trigger Range is Generated Every 20-Minutes
When the countdown timer in the Alert Software reaches 0:00 the system will automatically create a new Trigger Range and plot 2 vertical dashed lines on your NinjaTrader Chart. When the price is inside the Range it’s in the “no trade” zone. We look to take an entry when the price starts breaking out of the range. It may take a few minutes or even longer before the price can start breaking out of the Range (we play the break in either direction – Long or Short). There are times where the price stays trapped inside the range for extended periods of time – typically in a dull sideways market – and we want to avoid taking trades at times when the market is telling us that it’s unlikely to get a breakout that gets any “traction”. In a hot market you will see the price break out of the range and never look back. High volume, active participation, trending markets are the best environment to trade in and the MT20 system will get us in right at the beginning of big trending moves when they occur.
3 Types of Entries To Look For
There are several different types of entries we can look for when the price breaks above the top or below the bottom of the range. The first is the initial breakout which can occur within the first few minutes of a new range being generated. This would be trading right above or below the top or bottom of the “edge” of the range. Since it’s perfectly valid to take multiple trades on the same range, we can also look for a pullback towards the edge of the range. Say the price breaks out of the top of the range and you take a trade and complete that trade a few minutes in, you might look to take a second trade after a pullback to the edge of the top of the range. We find that using an 18-period simple moving average can also help us locate good entries when the price pulls back and to the 18-sma and then makes a move off of it.
4 Basic 20-Second Chart Patterns
Here are 4 different types of chart patterns you are likely to see on the 20-second chart and the entries for each are explained below.
The 2-Bar Range Breakout
With the 2-bar range breakout we are looking to take an entry 1-tick past the high (or low in the case of a short) of the previous two bars or candles – that have broken outside of the range. You must wait until the bar closes before you know where the high or low of the previous bar will be. This strategy is useful for taking an entry right at the edge of the Trigger Range as price begins to break out.
Long-range or Large-range Bars
Be wary of taking an entry right away after a long-range bar penetrates a Trade Barrier (the upper or lower end of the Trigger Range). Frequently you will see a pullback after a long-range bar and we can look to play a technical pattern that develops afterwards.
Pullbacks and Trendline Breaks
Many times you will see the price break out of the Trigger Range and then it works its way back towards the top or bottom of the range. You don’t always have to take an entry as soon as price breaks out of the range. Sometimes it’s advantageous to let the price consolidate and form a standard technical pattern that we can use to take the entry. The example below shows a standard trendline break entry after a consolidation above the range.
18-Period Simple Moving Average Touch
We’ve found that an 18-sma works well as a reference point on the 20-second chart. It can be used as an additional indicator to key off of when taking entries. In the example below the price initially broke out of the range and then consolidated as it ran into the 18-sma. As soon as you see one pullback that touches the 18- period sma you can look for another 2-bar range breakout entry.
20-Second Candlestick Bar Types
We recommend you use 20-second candlestick charts to trade this strategy. Here are some common candlesticks you will see often on the 20-second chart.
Trading the Break of a Wedge Pattern Example
Here’s an example where price breaks out of the bottom of the Dynamic Trigger Range and forms a wedge. Pennants, Flags and Wedges are common patterns found in the market and we can play these on the micro level on our 20-second chart.
A “No Trade” Example
Here’s an example of dull price action where the price is trapped inside of the Trigger Range for over 17 minutes. You can see that you would have never triggered-in a trade using the 2-bar range breakout strategy. When you see price action that clangs around inside the Range like this you want to sit on the sidelines and wait for the countdown timer to run down to see how the next range looks. Avoid taking entries when the price action is sideways and seems dull, even if you see breakouts of the range. In the example below you can see the Trigger Range was 2 points and the price only poked 1-tick outside the range for 17 minutes. Towards the end even if the price had gone an extra tick and broken the 2-bar range, it’s highly unlikely it would have gotten any “traction” and moved substantially. If price is trading in a 2-point range for 17 minutes, the odds are low that all of a sudden it’s going to break the range and make a 3 point move past the barrier. The #1 trick to success to trading with this strategy is to gauge the market action and know when to avoid trading. Just be patient because the action will eventually pick up and you know there’s a new setup coming every 20-minutes.
The 3-Bar Breakeven Stop Move
Getting a trade to “breakeven” is one of the tactics we want to utilize to minimize risk. Once a trade is at breakeven we can’t lose money on the trade. Actively managing your stop is an important part of trading the MT20 strategy. The 3-bar breakeven stop trick is simply waiting until you see 3 consecutive “higher lows” (in the case of a Long trade) above your entry, you slide the stop up to the entry. IN the case of a Short trade you would move the stop to breakeven when you see 3 consecutive “lower-highs” below your short entry.
A 2-Bar Range Trailing Stop
Once price takes off in your favor – the first goal is to get to breakeven. Once you get to breakeven you want to actively manage your stop to capture as much of the move as possible – while attempting to stay in for a big move. The big wins with the MT20 strategy will happen when you get into a trending move that turns onto a big “runner”. This occurs frequently in the market and catching a runner clean up a lot of small stop-outs and commissions. Since we are playing on the micro level we want to give back as little as possible when a trade moves in our favor. Once you’re at breakeven you can start trailing the stop just below (for a long) the previous 2-bars.
The 6 Deadly Sins of Trading to Avoid
Alert Software and NinjaTrader Indicator Configuration
Here are the Parameter settings for your NinjaTrader indicator for the Micro Trader 20 Strategy that correspond to the ES-20 tab
The ES-20 tab in the Alert Software corresponds to the MicroTrader20 choice in the “system parameter” setting in the NinjaTrader indicator. The Micro Trader 20 system entry triggers off a 20-second chart.
Configuring a 20-second chart
NOTE: A 20 second chart timeframe isn’t a default in NT8 so you will need to click the time interval on your chart, then click “configure”. Select “Second” then select “15” over on the right – hit “edit” and change the “value” to 20. Click Apply and OK and now you have a 20-second chart available in your drop-down box for selecting the timeframe.
If your trading platform doesn’t support 20-second charts – such as Think or Swim – you can use a 500-tick chart instead.
Setting Up An ATM Strategy
Here is the recommended Default ATM to start off with. This ATM uses 2 contracts and employs our Delta Neutral Breakeven Stop strategy. The advantage to having an ATM set up is that as soon as you place an entry order – it automatically places a stop and targets for the trade. The stop protects you in case your internet goes out. In a fast market the 1st Target can get hit in the blink of an eye – before you have time to react manually. You can use this ATM as an example and set up a couple different ones to use in different market conditions.
The ATM strategy shown above starts with 2 Contracts and sets an initial 2-point stop. The first “Delta Neutral Target” is 1-point, where it sells 1 contract and then automatically moves the stop up 1-point (at that point the trade is at Breakeven). Then it goes for a 3.5-point Target on the second contract.
NOTE: When setting up that ATM you must set the same Custom Stop Strategy Parameters for both Target 1 and Target 2. See on the top image how the “Stop strategy” has “custom” for both – that’s where you set it.
Keep in mind that there are times where the “price action” is dull and may be trading in a narrow range – and a 3.5 Point Target isn’t going to be feasible. Under those circumstances you will want to drag the 2nd Target down, say to 2 points. The ES is not always going to make a big move when it breaks out of the range. You should be aware of current market conditions and adapt your expectation to the behavior and ranges you see at the time.
Also, once you have reached “Delta Neutral” and the first contract has been sold for a 1-point profit, you will want to actively manage the Stop on the remaining contract. You will want to move the stop along with price to protect profits. When you see 3 higher lows (in the case of a Long) you can slide your stop up to your entry, thus insuring at least a 1-point gain on the trade. (A 1-point gain on the first contract that automatically sold – and the second contract gets sold at your entry point).
Tips for Scalping with this System:
1) You are NOT going to be able to trade every Alert – so your goal is to be very selective. The Dynamic Trigger Range is going to shift every 20-minutes which is about 20 ranges per day during the cash session. Not every range breakout attempt will follow-through and go on to make a significant move out of the range.
2) In choppy markets you will see the price attempt to escape the Trigger Range – poking through it in both directions – but then price reverts right back into the range over and over. These are the type of choppy conditions you want to avoid. When the market is dull, low volume and range-bound (like around the lunchtime lull or during the summer doldrums), you want to trade when there is “action” – not during dull periods.
3) Most days it’s better to trade early in the day and then wrap it up for the day – don’t over-trade. The best price action and volume typically comes early in the day and things can get dull for a few hours around lunchtime on the East Coast. However there can also be some good price action in the late afternoon or if there’s some type of new that breaks. Wait for the price to escape the opening range.
4) Be extremely careful if you are trading outside normal market hours. Our back-end algos run around the clock but you want to trade YOUR preferred instruments during active market hours. Also be aware of extra margin requirements to trade the Globex session. Best to stick to normal hours, though occasionally the system will catch a significant pre-market move – usually if there is news or something driving big volume before the regular market open.
5) Trade on Sim for the first couple weeks at minimum. It’s going to take at least that much time to become familiar with the behavior of our system – and the nature of the Dynamic Trigger Range over multiple types of market sessions. You will need time to get familiar with trading using the Entry strategies and experience how price reacts around the ranges over different types of market sessions.
6) There are basically 4 ways to take entries – and each will have varying degrees of success in different market environments. The analogy we like to use is that if you are playing baseball and you are up to bat, you are going to swing differently at a curve ball than you would a fastball. You would swing the bat differently if you were trying to get a base hit than if you were trying for a home run.
– wait for a 2-bar range break past the Trade Barrier (conservative)
– wait for a 1-tick move past the high or low of the penetration bar
– place a limit order a couple ticks past the barrier (super aggressive)
– wait for a technical formation at or around the barrier to develop
(the Trade Barrier is the Range High or Range Low)
7) Since you are Scalping – be certain to take profits quickly when they are there. Also be sure to move the stop quickly when there’s a chance. If ES moves say a point in your favor it’s imperative to take a profit or sell a partial position – or move up the stop. This is why it’s called Scalping. Don’t be afraid to get stopped-out at breakeven.
Here’s What Makes This System So Unique:
1) It’s super-easy to Trade Along With This Mechanical System.
Just open the Alert Software and check the Countdown Timer. You will know exactly when the next trade setup will occur. There’s a Trade Alert at 9:20 AM (Eastern Time) in pre-market and then then the first Alert of the Cash Session is at 9:40 every day (10 minutes after market open). After a trade is completed just check the Countdown Timer and you’ll know exactly when the next trade setup will hit. (A “new trade setup” means that the software automatically calculates a new Dynamic Trigger Range that we will play off of). That frees you up to do other things, maybe grab some coffee or make breakfast and you’ll never miss an alert. You don’t have to sit in front of the screen watching every wiggle on the chart all day because you will have a timed regimen for trading. Every 20-minutes throughout the day you get a new trade setup.
(The Micro Trader 20 algo runs around the clock 24/6 when ES is trading – but we recommend trading only when there is sufficient volume and price movement)
2) You can trade either the MES Micro Contract or the ES Contract with this system.
We recommend that you start off with the MES Micro Contract to get the hang of trading along with this system and work your way up to the full-size ES contract. Starting off with MES will help you build your confidence and prove that it’s working for you, scoring points and profitable. Trading MES involves very little risk since it’s only $5 per point. Anyone can start trading Futures with a small account (a couple grand) and very little risk. MES is the perfect instrument for beginners learning the ropes. Build your confidence trading live with the Micro contract.
3) The Entry and Exit Strategy is Completely Mechanical – No Guesswork.
As you see in the video above, once the Countdown Timer runs down to 0:00 a new Dynamic Trigger Range is generated. Now we get ready to trade a breakout of that range – whichever way it breaks. Once the price breaks out of the Dynamic Trigger Range we simply monitor a 2-bar range for an entry. As soon as we get a 1-tick penetration of the most recent 2-bar range we take the entry. Once the trade is working, we look for 3 higher lows above the entry (for a long) to move the stop to breakeven. Then just trail your stop up below the previous bars and stay in as long as price movement keeps you in.
4) The Strategy Can Hook You Into Some Huge Runners.
While we are playing off the charts and ranges on the micro level, many times you will hook into a big runner – early on in the move. Frequently when the price breaks out of the range it will go on to make a substantial impulse move. Using the strategies in the video above, you can hook into some huge moves, and capture big points when the market is trending. Taking entries based on the micro level can get us into a trade right at the beginning of a substantial move. The actively managed Trailing Stop keeps us in as long as the trend persists.
Here’s a screenshot of the Countdown Timer
You can see that there’s 1 minute and 33 seconds left until the system generates a new Dynamic Trigger range. If you have completed a trade on the current range and there’s only a few minutes left on the timer, you want to wait for the next range. If you are already in a trade and a new range is generated, if the trade is working then you want to continue with that trade.
4 Advantages To The Micro Trader 20 System
– Focus in on periods of higher probability price action
– Trade at the micro precision level with tighter stops
– Gets you in a trade at the early stage of a BIG move
– Set your trading activity to the clock
Here are some example screenshots that show different types of price action you will see after an alert is generated