We have decided that the auto-trading version of POV needs fewer trades and longer trades. It also needs fewer targets that are further away.
The original version of POV developed for self-directed traders with low transaction costs uses a 3-target, peeling-off strategy wherein, hitting the first target earns sufficient profit to pay for the entire position. In other words, it creates a “Free Trade” where the possibility of loss has been greatly diminished while keeping the upside potential of those contracts still in play.
The Free Trade is a super stress reliever for us day traders. With at least a minimal victory in our pocket, we can get off the pins and needles and actually enjoy more of the trading experience. But there is a price to be paid. When we “scale out” of a trade, we are not earning the maximum profit on the entire position. Losses, on the other hand, are always suffered to the max.
With our transaction costs more than tripled, we must take fewer trades. And we must get the most “bang for our buck” we can from each and every one. Thus, we can no longer afford the comfort of peeling-off and Free Trades.
Original POV also features CFB Mode (“Come From Behind”). CFB allows us to consolidate all our contracts at a single target based on the Average True Range of a higher time frame. CFB requires a strong, with-the-trend impulse wave that is accompanied by rising volume and a triple alignment of our MACD oscillators.
Of course, the CFB technique can also be used to hit our daily profit target in a single trade. Henceforth, a single target will be our default ATM setting.
I have created three new strategies:
- 1 TRADE GRAND – this is an 11-tick scalp that will earn our minimum daily target of $112.50 per contract net of the $20 per-contract cost.
- 1 TRADE GRAND PLUS – this is a 15-tick scalp that earns our preferred target of $162.50 per contract net of costs. And,
- RUNNER – This sets a single target at 55 ticks with a manual trailing stop starting at 21 ticks.
How well do they work? If the proper conditions exists, the work pretty well. Take today for instance.
At about 7:15am PST, it looked like the market was breaking down so I went short. Instantly, the market reversed and I exited the trade. Fifteen minutes later it appeared to break to the upside, so I went long. Sure enough, the market instantly reversed and I exited again. I was now down -$8,800 and so disgusted with the market and myself, that I bid a hasty adieu to my fellow traders and closed the ROOM.
I bitched and moaned for a couple minutes, then I decided the market would not get the best of me this Friday. So, when the market broke to the downside again, I loaded up the RUNNER and went short. Around 8:20, I pulled the plug with a score of +$715 and called it a day at that point.
I will meet all current students and monthly subscribers back in the ROOM on Monday for another test of our new and improved POV. Stand by for further updates.
