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Variation on the Theme

As a slight deviation from the COR method, consider not exiting at the end of the day. I realize that if you do this, then the COR method will no longer be a day-trading method; however, it may yield considerably more profits and higher accuracy. As a case in point, consider the historical record shown in Figure 11-13. This report shows what happens when the COR trade is not closed out at the end of the day. Instead, the trade is held until the twentieth profitable open, or until it is stopped out or reversed by an opposite signal. As you can see, there is a dramatic improvement in results and in accuracy.

Compare the historical results here with those covering the same time span but with exit MOC or within the day on a stop (Figure 11-12), trailing stop loss, or the tenth profitable opening. The average profit per trade increases from $293 to over $638, while the accuracy increases from 67 percent to 77 percent. The total number of trades decreases because positions are held for a longer period of time, but the total net profit increases substantially.

This is a strong testimonial to the value of the method, but it also suggests that the day trader may, at times, wish to hold a position in the expectation of a larger average profit. One way to "have your profit and keep it too" is to trade multiple units (i.e., several contracts), taking day trade profits on one unit while holding the remaining unit in accordance with the parameters I have cited.

Summary

This chapter discussed the importance of closing versus opening relationships and presented the COR method for day trading. Specific rules of application were discussed. The assets and liabilities of the method were analyzed, along with specific historical test results. I also provided suggestions for maximizing results by holding positions for exit beyond the day time frame. Note that the COR method is a dynamic method that should be adjusted to market volatility and to individual markets.