Hello everyone. My name is John Paul. DayTradeToWin.com.
Today is video lesson #2. In this continued training, I want to show you how the DOM works,
how to place orders, what are limit orders, what are market orders, stop orders, etc.
I want to cover the basics on how to use the DOM aka price ladder or matrix. I also have
some tips on how to best use this price ladder. January 24, 2014 is today. I am showing you
the Atlas Line software. These orders you see here, for example, the short at 1809.50
and 1807.25 are entries into the market to sell. You want the market to go down. That’s
exactly what happened. The price went down. How do you actually place these orders? Go
over to the DOM. The way you open the DOM is via NinjaTrader’s Control Center, File,
New, Dynamic SuperDOM (that’s what I use) or Static SuperDOM. Either one brings up a
price ladder / DOM. Then choose the market you want to trade from the Instrument drop-down
box. A few futures and forex markets are listed in mine. Choose the market you want. You will
need to make sure the markets you want to trade are added to this list via NinjaTrader’s
Instrument Manager. Here, choose either your sim or brokerage account. Here is the quantity
and here is the ATM strategy. I will cover all of these ideas, including how to manage
a trade using the ATM, how to place trades, what the trade means, etc. I also use the
terminology, “first-come, first-served”, which I will go over. First thing – how do you place
an order to go short like right here. When the Atlas Line gives an order to go into the
market, I like to use limit orders. I try to get as close to the exact price as possible.
To place a limit order, left click on the grey sell column anywhere above where price
is currently trading. This trade happened earlier in the day at 1809.50. I can’t even
scroll up that far, but let’s just say you placed an order to go short by left clicking.
The definition of a limit order is this: I want to go short at 1809.50 or better. If
you try to place a limit order below where price is currently to sell it, it will try
to get you a better price. Always place the limit order above the market for selling the
market. If you
want to buy the market, the opposite is true
– left-click above. Let’s say you want to buy at 1800. If you click and drag, it’s going
to say you want 1800 or 1800.25, but it’s trading at a cheaper price, so I’m going to
give John a cheaper price and automatically fill him. The term first-come, first served
is related to electronic markets and trading. Whoever places limit orders first get into
a queue to get filled first on those orders. Take a look here at how many traders (or contracts)
are waiting to be filled short at these prices. As soon as you place a limit order, say here,
I am in line. I may be #440, or #100, #200, etc. As soon as price touches 1800.25, I am
waiting to be filled. Sometimes, the price just touches where I’m waiting to be filled.
I may be last in line. If my number is not up and only, say 100 contracts get filled,
then I am out of luck. Price will touch the price of my order, but I won’t get filled.
When it comes to placing orders, it’s first-come, first-served type of scenario. I bring this
up because many traders click on their limit order, either to get into the market or to
text on a target. They say, I don’t want this price Maybe I’ll get a better price and I’ll
move this to a point better, say 1801.25. Now, the trader is in the back of the line
at the new price. Each time you move a limit order, you’re putting yourself at the back
of the line. I tell all my students, try to keep your order where it is. Many other traders
are moving their orders in and out. The other thing with Ninja – and some other platforms
have this as well – it’s called an ATM strategy. I use the ATM strategy feature to utilize
specific targets and stops. As soon as I get filled, the ATM strategy that I previously
set up tells NinjaTrader and my broker I want a specific stop and target. The ATM strategy
puts me in the market with a limit order and a stop right away – it’s very fast. Here,
the first thing you have to do to create your own custom ATM strategy is select Custom from
the list. Specify the number of ticks for your stop (10 ticks) and say 8 ticks (2 points)
for your profit target. The ATM strategy will apply as you see here. You can click and move
them around. Again, only move them when you absolutely need to as previously discussed.
You can have as many of these ATM strategy templates as you like. I recommend saving
them by right-clicking this grey area. Select manage ATM strategy templates, and you can
name it whatever you want. I pretty much use a three or two
tick target for my scalping strategies and four or six tick stop relative to the trade.
Every time you enter, it’s immediate. When I want to exit, I click Close. Everything
on the chart gets closed out. The
next order is called a Stop order. I use the middle mouse button for this type of order.
Stop orders are like, “I want to catch this train.” You can catch the market as it goes
down. As this market is coming down, I want to catch this train and get short as it moves.
The same thing is true for a long. With a limit order, price always has to retrace back
to it. With a stop order, you try to catch it as its moving. Most traders think of a
stop as a stop loss. That’s true, but you can also use a stop as you try to get into
a trade. One last thing I want to cover is a little bit of psychology. This question
comes up a lot – how many contracts should I trade? Trade one contract until you feel
comfortable, so you can do that consistently. Even if you have a million dollars in your
account, I still recommend starting off slow and small and being consistent. If you can
trade one contract consistently well for a week or a month, then all you have to do is
go to two contracts. Again, be consistent for a week or a month until you’re ready to
go to three. It’s important to know that you can take a loss and recover within the same
day or the very next trade. Even if it takes a day or two, recovery is still possible.
That builds confidence. Again, start of small, be consistent, and grow from there. Know what
it’s like to get stopped out
and recover. My name is John Paul. I hope you’ve enjoyed this video trading lesson.
Next week, I’ll put out a new lesson. Until next time, take care!