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.
If you are new to Jacobs Ladders, please start with this post Introducing the Jacobs Ladders™ Pivot System. Next I highly recommend reviewing past blogs in this series where you can find 60 plus examples. You will find the links to past weeks posts at the bottom of this article.
Keep a runner
By now, it should be clear to everyone who pays any attention to market that since the 2016 Feb ES 1820s, market has resumed strong upwards trend. Since 2017, the up trend has only accelerated. All signs point to this trend being continued this year also. Till the trend is not there easy money is made riding the trend, not fighting it.
As we saw this week, often we wake up to see ES gap up from a support test the previous day. In such market, it is very wise to keep a runner going from a level entry. Especially when the level is at the area for a positional low in the price as called by Stan and Jack in the big picture – 50 back tests, Middle bollinger back test, Lower band support etc.
I have data on the levels from 2007 Jan 1 at one min candle level. I have conducted extensive programmatic analytics using this data. I have this interesting data to point to.
Let us consider a hypothetical example of a person who does the following pattern of trading.
– This person places an entry every single day front running ES level Low by 2 handles with just one contract.
– Account starts with $10k and for every additional contract kept, minimum margin is added. Only minimum margin is needed because account only keeps profit runners.
– Stop is places 1 tic below the Low level so the risk is 2.25 handle on one contract
– If +2 handle move is achieved, stop is moved to break even.
– If the position is not stopped, it is kept, never cashed.
– If stopped, this person does other day trades and makes back this -2.25 loss on one contract. Let us say this person is an experience trader so there was no trouble in making this $125 loss back by trading any of the instruments
– if stopped there is no re entry for continuation of trade on the same day. Only one trade attempt is allowed per day.
What would be the result? Here are the answers
That is a neat 256% profit!
What would be the result if someone started this in 2007 Jan 1, went thorough the recession of 2008 and the big pull back in 2016? Well that is a topic for another weekly post.
ES Jan 2 Tuesday
ES started the year very bullish closing upwards of 2% on first week. However most of the moves happened during globex hours. During day trading time price moves were muted except on Monday where there was an clear example set up explained here
CL Jan 4th Thursday
The post inventory report move on CL was muted this week, however, it did give a clear short entry. It also happened to be a place to try a swing entry short, the 62 area Stan had called for. This is an example of how to find a swing entry using a level on Jacobs Ladder allowing for a quick risk out set up and trying the runner for swing entry.
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.