Payoff Matrix coupon

C2
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Coupon code is UGCU93279

Payoff Matrix (115194250)

Kindly accept this as an introduction. I have been a keen observer for some bit of time. I’ve seen impressive strategies that all of a sudden disappeared. My take is the “leader” was interested in results and attracting followers. Due to this inherently risky behavior they would avoid stops due to their “expert” entries only to be followed by a large draw. The amount paid in terms of subscription price and lost capital is staggering for inappropriate behavior by the “leader”.

I would not expect followers until I have a proven track record here on C2. However, I have included a coupon for a “free” month. I would like followers to test drive my method. As in car sales, you would take the car for a spin but don’t always buy at the end of the test drive.

I work in probabilities with my trading. I always use a stop because really anything can happen in the market. This is not a mental stop. My stops are sitting in the book at time of entry of the trade. The stop is only moved to a better location after the trade is profitable for protection of profits… My stop is a dollar value representative of 1% to 2% generally of the account size with a max stop value of 5%. But most trades fall in the 1% to 2% range of stops. As for targets, I go for a minimum of 1:1 but preferably 1:2 or 1:3. The main takeaway here is you the investor know exactly what the stop price is and it’s “live” in the book if there’s a trade on. Never a “mental” stop.

What you don’t get. A promise. No promise of returns. No promise of anything. I know what I’m capable of but you need to make that determination if my strategy is appropriate for you. That’s what the coupon is for. On simulation there’s no way for you to know that I use stops. You just see the results. I have seen too many strategies fail due to “impressive” results followed by a large amount of followers followed by tears. I want you to see the inner workings of my strategy for yourself.

Good day

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When is the expiration of the coupon?

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Tuesday evening the 12th of December at the close of the U.S. markets.

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I have updated my description but I am being told it needs approval from compliance. For potential followers here is the same description you will (hopefully) find on my page.

SYSTEM METHOD:
-trades futures
-always uses a stop. if a trade is on there’s a stop in the book. never a “mental” stop.
-I use a scanner to look for certain criteria (anomalies)
-looking for mean reversion trades and momentum trades
-for example: with RSI overbought conditions generally a good place to short. I look at it different. If it’s mean reversion I do look to sell an overbought condition. However, I look to buy an overbought condition for momentum trades. I have additional inputs to filter the two. I also look for random walk and have the scanner discard those.
-the scanner uses a 3 day cycle and looks at various time frames
-every morning I look at what the scanner results are
-I trade a 5 minute and 15 minute time frame. Mainly 5 with guidance from the 15
-I look at 30/60/240/D/W times for possible resistance or support
-I also look at volume profile for entries, exits, and stop placements
-I use the top results for momentum and top results for mean reversion and discard the rest

RISK MANAGEMENT:
-stop is generally 1% to 2% of the account size. never more than 5% and at times occasionally less than 1%. but most trades should fall within the 1% to 2% range.
-stops moved (to a better location) to protect profits and depending on time of day

TARGET MANAGEMENT:
-I generally go for 1:1 but preferably 1:2 or better 1:3
-I will take the trade off occasionally if conditions warrant (before a target or stop is hit)
-generally positions are closed by the U.S. session close

SCANNER INPUTS:
-ADX (can we trend)
-DMI: directional movement indicator (bigger picture trend)
-moving average crossover (based on various inputs). looks at closing prices and 3 day cycle
-Bollinger bands and Keltner (looking for extremes)
-RSI (compares price of a market to itself)
-slow stochastic (measures relative position of closing price. this is done on various time intervals).

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“Keen observer for some time” -C2 Member since:
2017-12-04

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As a courtesy to those potential followers that missed the deadline for the coupon, I have extended it to tomorrow morning before the U.S. markets open. There is a new coupon code. I also will post a memo I sent to current followers to help better understand my strategy. I won’t bother you with these everyday. This is just to help those that may be interested with a more in depth look.

coupon code UGGP84676

Several memos were sent today but this was the final one to current followers

Recap and analysis of today’s trades. We had two trades today. HO for a profit of $3766 and YM for a profit of $51. We made $3817 today. My scanner produced a strong short on the entire energy complex (CL, HO, RB, NG). HO was the strongest so I discarded the others. The scanner produced a strong long in YM. I did not take that as it also had a conflicting overbought signal. Any break in structure will turn the trade digestive to down. There was a break in structure around 12:30 (news related; Rand Paul). This was against the trend and we already had a profit of $3200 from HO at the time, I took a small spec position. Small because it was against the trend with a tight stop right above the high of the day. I did not jump on the trade as it was likely to retest the higher area so I placed an order to short 2 YM 24553. In the end it turned digestive but was profitable.

HO analysis and trade vision
Short 3 HO 1.9702 with initial stop at 1.9840 (risk of $1738.80)
Short 1 HO 1.9678 with initial stop at 1.9815 (risk of $575.40)
Total risk on entire position $2314.20
Initial targets
Target 1: 1.9643
Target 2: 1.9463
Target 3: 1.9264
Target 4: 1.9208

TARGETS AVERAGE PRICE:
1.93945
If all targets hit, trade vision was for a profit of $5065.20

Position average price:
1.9696

As stated in the memos throughout the day, stops were tightened successively as targets were hit. At 11:09, I made the decision to take the furthest target off. The entire energy complex (CL, HO, RB) started to build a base off support and positive structure. In addition, all 3 started having closes above various averages on a 5 minute time frame. At that point, I left target 2 as is and made the final target an open ended objective. At 10:20, a memo was sent that all stops are better than break even and we are guaranteed a profit for the day. Stops continued to improve and the final 1 contract was taken off at 2:10 as the energy complex closes at 2:30 with not much movement after that.

MAE:
At the worst point, the trade hit 1.9755
At the worst point the trade was down $991.20

Results:
Trade profit was $3766
Based on initial risk, the risk was 1 to a profit of 1.627

YM analysis and trade vision
Small trade of 2 contracts short YM 24553 with a stop of 24280
Total risk on that position was $270
Target was open ended with high expectation (over 1 risk for 5 profit or higher)

MAE:
At worst point trade hit 24569
At worst point trade was down $160
Trade was taken off 15 minutes before the close
Profit was $51
Had the trade been held until the close it would be worth $220
Trade was profitable but not to expectation

Good day

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Hello,

I am still looking for additional followers to test drive my strategy. I have included another coupon. Expiration is the final trading day in December the 29th at the U.S. market close. This does afford you a month without cost.

Also if you are a current follower please leave comments good or bad about my strategy.

UGFB56473

Good day

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I highly recommend that anybody who is interested in discretionary trading takes advantage of this free subscription offer even if you have no intention to auto trade it at this time. You will rarely find a trader on C2 who not only provides a thorough description of his trading system but also sends a detailed analysis of his trades to his subscribers after the end of the daily trading session.

1 Like
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I second what Karl has just said. It is refreshing to find a trader who goes through great lengths to explain each trade and enlighten subs about risk management. He does not have to and I am not saying others should do so but he gets additional points for doing so in my book. So far I am very happy with this new strategy even though it is new and hope to see it do well on C2!

1 Like
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Thank you for your
thorough description.

I would be interested in how you think about the effectiveness of a stop on weekends when the markets are closed, or when a “flash crash” occurs and the stop turns into a market order in a rapidly falling market, or when a 9/11 event occurs and the markets have to close for a week, or when one of the rating agencies downgrades the US late on a Friday night, or when the market overreacts to a statement only to return to same intraday levels before the decline (like the night of the Presidential election). My experience (both actually and simulated) is that stops can be very draining on a strategy. I’m always open to how others incorporate stops and what their experience has been. Thanks!

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Hello RFC,

Personally I do not hold positions overnight only day trades.

After the “flash crash”, the exchanges put mechanisms in place in an attempt to prevent that from happening again. Of course it could but the exchanges have a vested interest in not seeing another one.

When I take a trade, I want to give it the highest probability of working out. I make sure all the news that is expected is out for the day, I also make sure the market has enough time to have the position work. Being aware of what time in the day you are initiating the trade is just as important. If that’s not bad enough, there’s the location of stops and possible targets and making sure the target has a much higher chance of hitting. You also need to be realistic that your target is attainable and reasonable and you are looking to get a return of minimum 1 to the 1 you risk if not better. Aside from this platform, I do trade myself and am watching the market if I have orders pending or positions. If the market starts to drop in an unexpected manner rapidly, I take all positions off even before hitting stops.

If you do hold overnight or over the weekend, you should be aware of events that may impact the market. We knew about the election and expected high volatility. In a situation like that, you have to look at a big possible drop and ask yourself if that’s something you can live with. Other situations we don’t know are coming but do impact the markets. It really comes down to your risk tolerance. Certainly there are large investors institutional and individual that don’t use stops instead looking at the daily close. If you are an overnight trader/investor, just look at the worst possible scenario and make sure you are OK with that. If North Korea fires a missile over the weekend that does accidentally land in Japan, yes the markets will open much lower Monday morning. Is that much lower open possibility keeping you up at night? Another consideration is the leverage you use and the size of your account.

Here’s why I use stops. It may not work for every trader but it works for me personally. For me, it’s a probabilities game. Most trades are going to end up being 1R winners and some stop outs for -1R. R meaning the return you make relative to the risk you take on. On occasion a few times a year, a trade will produce a large R. If risk/reward is 1:1 you need to have a win rate of 50% to break even. If risk reward is 1:3, that break even goes to 25%. My goal is to get a blend. Let’s call it 1:2. Break even is 33% at that return. How many day traders are wrong on 67% of their trades? Not that many. But the statistics point to a huge number of traders that lose money (up to 95% by some standards). People react different to money depending on who they are. Trading is really money in other words so emotions are involved. When they go back to look at their trades (if they even do so), they understand at what price the trade should have been taken off. I look at the entire trade life cycle before the order is submitted when there is no emotion involved. The last thing I want is to talk myself out of getting out of a losing position and it gets bad. My biggest fear isn’t getting stopped out. My biggest fear is diverting from my plan. Stops get hit that’s part of trading. Psychology is another problem. We’re always told to be right. That doesn’t work in trading. Understanding how to be wrong is a better strategy. When a trade goes bad some traders naturally want to protect it because being wrong is a reflection of them. So instead of using a stop, they use hope. Hope works every time except for the last time when it comes to trading. A stop solves that.

If you want my advice, start keeping records. Good records. Take pictures of setups. And after a while you’ll have a good database of setups you take with the percentage they work. Could be anything. Fibonacci, MACD, or a combination of things you see with different indicators. But understand that setup. How often it works and under what conditions it works and fails. I’m going to guess you’ll find some that work 50% to 85%. I’m also going to guess you won’t find that many that fail nearly 70%. When you see the setup, your confidence is built up from the thorough records you’ve kept. You know where the stop should be placed and what is a realistic expectation of a target. Have that plan and stick with it and you’ll find more wins in the W column and less losses in the L column. The main thing is not to worry about being stopped out. It happens. You should be concerned more with not sticking with the plan you set for yourself. The rare events you mentioned happen. You may lose more than intended on occasion. If you are a trader focus on the trading. Focus on the appropriate risk/reward. Don’t worry about what you don’t have control over. If the market fell and you got stopped out and it came back to your entry because it was only an over reaction who cares. You lost one trade. If that one trade was 1% or 2% of your capital who cares. It’s not a good feeling. But how often does that happen? Most times you just hit your target or hit your stop. In an event you lose more due to something unexpected hopefully you have enough wins to keep you in the green for the year. If you average 10 trades a month or 120 trades a year you shouldn’t worry about one trade getting stopped out due to something unexpected. Look at the bigger picture. Most traders fail not due to their setup or that they don’t have the right indicators. It’s emotion. A stop removes that.

All this if you are a trader. If you are an investor that’s a whole different topic.

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Hi Payoff:

You have obviously given this carefully thought and I applaud you for that. I especially like your practice of little to no overnight positions.

I don’t deny that stops work. You’re probably better at it than I, but I find it difficult to find the optimum stop threshold that doesn’t appreciably erode the alpha built into a strategy. When you’re in an environment like 2008, all those stops are not “just a trade”. They add up.

I guess I like to have more certainty about tail risk. Even during intraday trading, tail risk events can happen. I’m old enough to remember the 1987 crash when I saw many of my buddies crying alongside me in the futures pits in Chicago. Their stops didn’t work. 9/11 also happened just as the market was opening.

I think you have given your use of stops a good dose of thought. I prefer to be a little more creative in trying to not only stop the bleeding, but also get back in the game perhaps with a short term call option, put option, or long term call option to start with. With the low volatility market we currently have, the premium and theta decay is very manageable and allows for positions to be held outside of market hours.

I think you are going to be very successful. Thanks for being so transparent and setting a good trader standard!

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Stop placement is the $64 million dollar question. Some don’t need stops or utilize various other strategies instead of stops. Some absolutely need stops and don’t use them when that’s the one thing keeping them from becoming a profitable trader. Without knowing more about what or how you trade or about your strategy, my statement about using stops is generalized. I don’t know if you are stock guy or you trade futures. Things like that. I don’t know if you go long only or also short?

The market is always giving us subtle clues about its intentions.

Here’s a few ideas if you’re against stops. I didn’t mention options because most people don’t understand them. You seem to so there’s that. If you don’t want to keep paying premium, there’s inverse ETFs. You can hold an amount relative to a percentage of your portfolio. Another good hedge is finding the strongest stocks in a strong sector and go long the individual stocks and short the sector as the stronger stocks are going to outperform the sector. Stops aren’t the be all end all. But most don’t understand how to properly hedge.

Tomorrow I might short Soybean Oil. ZL or on some platforms BO. The January contract. If I did I’d short from 33.25 to 33.30. My minimum stop would be 33.36. A better stop is 33.45 and the furthest I’d put the stop on is 33.48. If you like to trade the Yen a decent place to go long is .0089095 to .008903 with a min stop of .0088955 and max of .0088835. Not advice this is what I would do. If you think ES is over extended, don’t just blindly short it tomorrow. Wait until it trades above 2705. Make sure it stops at 2707.75 and does not go above 2708.75. If all that happens and it comes back to trade below 2701.50 I would consider a short under those conditions. I would short from 2701.50 to 2703.25. Target would be 2671.75. Stop would be minimum 2705.25 to max 2709. You know that trade is working when it trades 2697 or below. If all that took place, you add more size if it takes out 2691.50. You might not get your target it might stop at 2685.25 or 2680.50. Most traders might short just because they have this idea that the market is overbought. Wrong reason. If you want to short ES and everything above didn’t take place there’s no short. Looking at my scanner, NQ would be a better candidate for a short. First it needs to trade above 6570.50 and not trade above 6579.75. Then it needs to trade below 6558. If all that took place a decent short would be 6558 to 6564.25 with stops 6583.75 on the further stop. Target 6455.25 or 6502 whichever the market focuses on. Again, with all those conditions not met on NQ there is no short. These trades are only if I see them tomorrow. Wednesday it’s a whole different ball game. The above shouldn’t happen in a bull market for ES and NQ. But even in a bull market there are corrective days.

That’s just how I trade. There are many ways to trade with most being valid methods. It comes down to what works for you.

And yes in 1987 all those guys in the pits next to you purchased the O’Hare ticket. We both know what that is.

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I can tell that you are really good at scoping out key levels both up and down - better than I. It strikes me that your approach is much more focused on day to day sentiment like a day trader would be (I’m not a good day trader).

I learned long ago that it is extremely difficult to CONSISTENTLY beat the market (I’m talking about portfolios that don’t live on the edge of a cliff with so much leverage like I see here on C2). As such, I first focus on risk and then let the return occur that is commensurate with that risk. Having said this, it IS possible for small investors to beat the market since they are not limited by liquidity constraints and there are so many tools available to the sophisticated individual investor to manage risk. Those tools include options, short ETF’s, and stops.

I don’t trade anything that I cannot model first over at least a 5-10 year period. It gives me confidence that I am not being lulled into a fantasy strategy. Your stop analysis is way more sophisticated than what I can incorporate into my models since I can’t get to the level of detail that you are using. I wish I could. Instead, I focus on an optimization of entry and level points that incorporate more of a “blanket stop”. It gives me returns in the 20’s on the notional amount and in the 80’s to 90’s on the leveraged amount.

Keep on doing what you’re doing. I am fascinated by it. You will be on my radar.

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Hello RFC,

I wanted to follow up on our pleasant conversation from last night. I mentioned 4 scenarios. I didn’t take BO/ZL trade but it worked. The Yen ended flat from where I said to go long. The closest stop would have been touched but not the furthest one. I did not attempt to take that either.

I want to talk about being flexible in the market. I think this point should help a trader trying to find his way. I mentioned two scenarios with ES and NQ last night. I talked about shorting only if the market goes up to a certain point and stops without breaching another certain point and coming back down. We never got that. The market did however take out 2691.50. I mentioned that as an add on point for more size in the short position. While not as valuable a trade, it’s still a valid short as it was an add on point. I gave you a target but but also mentioned ES may stop at 2685.25. Same thing in NQ. Never got the up on air scenario first but it did breach the add on point. I didn’t mention the add on point but there was one. I also said NQ will focus on 6455.25 or 6502. NQ focused and closed at 6502 and ES focused and closed at 2685.25.

My whole point is a trader needs to be flexible. You can’t control the market and have to go with what it’s telling you. I would have loved to see the market go up first. But a trader can’t be so rigid. My plan was to wait for my scenario and also add more size. The market spoke and it took out my add on point first. Don’t fight the market. Be flexible. The market did something a little different and I adjusted. Unfortunately for me my short order in ES was 2693.25 and the market 1 ticked me touching 2693 but never touched my order and I missed a fill. That’s not my point in all this. If the market is telling you something, stop and listen. Same with targets. I said NQ will focus on one or the other. Don’t be so stubborn. NQ went straight down and exactly sideways at the first target. Yes the further target is nice but when it goes sideways around the first target the trade is over. Market spoke loud and clear it’s over.

RFC this isn’t directed at you. I’m sure you are well aware of being flexible especially since you worked on the floor. There are a lot of traders and most haven’t found their way. I’m fortunate enough to have had some very good mentors. But not all traders are as lucky. Some will never have what it takes. But others are trying and putting in the time and effort. One of those guys might find this and read it and it might be the thing that pushes him to the plus side. For most traders it’s a small change that makes all the difference. They just don’t know what that change is and have to keep trying different things until they hit on something that works for them.

On a separate note, you mentioned my approach being focused on day to day. I think that comes down to personal preference. If something works why change it. I almost view myself as a “swing day trader”. And what I mean by that is I’m not scalping and taking 10 trades a day or more like most day traders. I like to find my trade early and see it through and manage it throughout the day. Almost like a swing trade with the life cycle being on a day time frame. I have tried holding longer and my approach does work on swing trades but I found myself waking up to check on positions. And normally people do that when the position is too big where they just can’t sleep. I can have a tiny trade with a $100 risk and I’ll still wake up to check on it. So for my sanity I decided to do away with that.

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You are correct about flexibility and you make a good case for how a trader needs to be flexible. I would add the need to be disciplined as well. I can tell you are disciplined. For me, once I have a model that works, the challenge then becomes whether I can be disciplined enough to follow it. I’ve left too much money on the table when I was too “flexible” by trying to “manhandle” the model. I find it especially critical during highly volatile uncertain markets when sentiment is all over the map to have a heavy dose of discipline to drown out emotion. How would you see your approach in markets like we saw in 2008? Would it be easier or more difficult for you?
Yes, I think “swing day trader” is a good description for you. I too like to sleep at night too. 

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Good morning,

Certainly discipline is a key attribute for success in trading. You mentioned a challenge to have enough discipline to follow a system knowing it works. Here’s an idea. Just as it takes 21 days or whatever it is to form a habit, you need to form that habit. You also have to build up enough confidence that the system does indeed work to execute. Your current trades you should leave as is. Going forward try this exercise. Cut your size down to the bare minimum. Either 1 lot or if your system requires multi lots cut it down to 2 or 3 lots. An amount that you really don’t care about. Once you get to where you want with discipline and not trying to “manhandle” the trades, add a little more size on the next trade. Keep doing this exercise until you reach the point where you put on the size you want and don’t manhandle the trade. If you go back to micro managing the trades cut your size down to the earlier point that you were fine. It’s important to think of this as an exercise. If not, you’re going to feel like you’re missing out on all this money and that’s going to create a whole new set of issues you’re going to have to deal with. So make sure you don’t start having those FOMO feelings. In your trading plan, I would include 3 things. First I want you to constantly monitor your positions. Not manhandle them just monitor them. Second I want you to do a review of your positions periodically. Once a week or if that’s too much once a month. This should be done when the market is closed. Last, I want you to include certain metrics in your trading plan for when you will manhandle your positions. If you know what to expect for draw downs and returns this is going to help. If either metric is outside of 1 standard deviation, there’s something else going on in the market. At that point you have the green light to manhandle. It’s part of your trading plan. You’ll know when things are out of line from step 1 because you’re always monitoring. If the positions are working as expected, there’s nothing to do. I believe you are confident your system works now but are concerned about another 2008 when the system might have not performed. Valid reasons. The steps above should help you spot the cracks and warning signs early.

My approach is to look at facts. A 50 period moving average on ES is a fact. If I look at ADX on CL that is a fact. There’s nothing subjective there. If you look at the same moving average on ES you’re going to get the same results. I have a scanner with various inputs. I have it look at various time frames, daily closes, and even a 3 day cycle. The main thing is I’m not stuck on one indicator like RSI. I know traders that live off the CCI and that’s it. CCI only works in certain markets. I believe in a blend to give you a better picture or a more clear picture of what are the facts today. You asked about 2008. I’ll tell you but I’ll add it was the same in 1998 in the Asian crises which only lasted 3 months if I remember and the period after tech blew up which was a two year period. In periods like that I have more stop outs than normal. But I also have many more home runs than normal. The stop out aren’t an excessive amount more and the home runs are huge. So at least with me I tend to do better in those high volatility environments. Keep in mind I’m not holding overnight so I’m not waking up to a nightmare. My scanner is also spotting cracks earlier because it is so focused on short term trading. I’ll take a few more false starts and a little more stop outs for 10 R days once a week.

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Sounds like you have good discipline while being flexible.

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regular price is $495? you’re going to need a 1 year track record before anyone signs up. If you’re here on C2 to make money, it’s best you lower your monthly fee to $50. At most I say you get 1-2 paying subs. Good luck.

7 Likes
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Hello TT3,

Thank you for your advice.

On a side note, I did notice you started to simulate my strategy. This indicates to me that you have some sort of interest in this strategy. If my assessment is correct, simulation only tells you half the story. The only thing you see are the results. What you don’t see is that I have a stop with every position. It’s not a “mental” stop, it’s actually a pending order and you the investor know the price of that stop. What you don’t see is how much leverage I use to achieve my results. You also don’t see the communication I have with my followers.

If I may I’d like to offer some advice. I can offer you a coupon which would afford you a month without cost. If you are interested in this strategy, this coupon can only add value and help you make your decision as you see the inner workings of the strategy. You take it for a test drive free of charge. If you see no value you simply cancel and lose nothing. The main takeaway here is the coupon can only add value to your decision.

And that goes for any other individual that would like to test drive this strategy. Anyone is welcome to test drive using this coupon. The coupon has an expiration the final trading day in December the 29th at the U.S. market close.

UGFB56473

Good day