Jacobs Ladders is a day trading system that provides perspective on high quality, profitable trade setups for day traders. The purpose of this blog is to educate day traders on this trading system and provide links to the levels on a daily basis. You may wish to bookmark this page.
The objective of the Jacobs Ladders is to help day traders identify and capture a minimum price movement between any two adjacent pivot points. This system when used correctly will improve the consistency of winning trades and helps minimize risk and losses.
In this weekly blog series, I will point out set ups that occurred during the past week that are illustrative example of how to use Jacobs Ladders for day trading. These examples have been tweeted out on our public twitter feed, you can follow along here at @the_artofchart.
For more educational information, please see the previous introductory post introducing Jacobs Ladders day trading system which can be found here
First of all I wish you a very happy new year! I wish you a successful year in trading next year!
Live Cattle – ‘LE’ As a Day Trading instrument
What does a day trader need in an instrument in order to make handles trading it?
It needs to move!
It needs to move between levels
A good range where Level High or Level Low is hit
A good reaction from level High or Level Low
A good chance of getting an escape hatch from Level High or Level Low if trade did not work
LE qualifies in all these area. It only trades from 9.30 AM to 2.05 pm Eastern time. The levels come out at 10 AM. so effectively just 4 hour of trading a day.
It is a very low margin commodity. Last I checked initial margin was $1900 per contract.
One handle is $400 worth. Most days it yields a minimum half handle move easily from a significant level set up.
Here are the key risk factors:
It is a very low volume instrument. So it is only good for small trades.
It can have a significant gap open the next day so never hold a day trade under water to next day. Do not convert a day trade into swing trade.
Here are a few examples on LE that demonstrates the points described above. I include these many from a week to show how consistent this instrument is in giving daily trading set ups.
Crude Oil Futures
Crude continues to be a great instrument to trade on Jacobs Ladders. On the days when CL price is volatile, the ladder levels gives great trade set ups. Here are is an example from Dec 20 Inventory Report:
Jacobs Ladders TOS Study
If you are a Think or Swim user you can see all the levels loaded into each of the instrument’s chart by copying and pasting code for a study each morning. The link for the study is included where the levels are published
Here is how TOS chart will look like where you have a 9 cell grid for various instruments with levels loaded. You only need to update the study on one chart. Levels will load automatically on all other instruments for which Jacobs Ladders levels are available.
Links to past weekly blogs
If you are new to Jacobs Ladders and would like to learn more, I strongly recommend going through past weekly blogs and looking at chart examples posted. you will see 60 plus examples
I hope this educational post helps you understand how to use Jacobs Ladders. Please look for our educational posts on our public twitter feed at @the_artofchart.