Welcome to M3 Futures Trade Room where method, math and metric are operating towards trade selection for optimal profitability.
Method: Bob Amico trades order flow with accomplishment and success and has distilled down his methods into his Market Delta Entry Indicator (MDEI). This novel entry indicator is designed to enter selected trends at pullbacks, thus offering prime opportunities for larger profitability. The MDEI has been in operation in Veritas Futures, his own trade room, for many months and the results have been remarkable (posted on his web site).
Math: This aspect of M3 futures trading looks at each trade MDEI entry for profitability based on Phalanx System that uses nested bracket trades to calculate maximal profits achievable with minimal stops. It also assesses diurnal variation and circadian rhythm from which we fine tune time distortions base daily segmentation. Further, we look for trade performance consistency over historical data viewed in ascending chronology to evaluate trade uniformity. Pullback analysis affords a calibrated trade variance to better define entry and trailing stop stats round out our evaluation.
Metric: Based on each trade (MDEI entry/Phalanx management), and understanding that all trades start with a uniform risk-to- reward ratio (R3) of 1:1, our metric for trade selection reflects largest average P/L returns (i.e. reward) for any given risk (i.e. fixed stop). Our cut-off for acceptance is ≥ $200 aver P/L per 3 contract trade (over last 10 trades) on ES; $180 on GC/Cl; $100 on 6E, and $80 on NQ/YM.