Should you Re-Enter a Trade using the SpitFire Model?

One of the inconsistencies that I found in the mentoring I received by Toby Alexander in the Christos Avatar Trading VIP Room is his stance on whether or not to re-enter a trade in the Spitfire system.

A brief background, the Spitfire system provides you with a visual signal to enter a trade when a trend changes direction (uptrend to downtrend, or downtrend to uptrend).   Also, if you get stopped out for any reason during a trade and the trend direction does not change, you may receive other signals to enter a trade in that same trend direction.  These signals are the TraderTrend bars.

As you may guess when you enter a trade in the middle of a trend your probably of a win for that trend is lower than if you enter the trade at the beginning of a trend.  So, the win/loss ratio will be lower.  However, this should not mean that you don’t enter the trend, since some of these trends continue for a long time and provide a big profit opportunity.  It is a matter of trading style and rules.

During the beginning of the Christos Avatar Trading VIP room webinars, I asked Toby about re-entry rules and he said that you can take these re-entry signals.  When I created my trading plan I wanted to include a re-entry criteria and Toby told me that it has a low expectancy and that he does NOT use re-entry rules in his trading, so I did not either.  However, in one of his YouTube postings that he shared with us in the VIP room tilted “Live 6E Trade May 9, 2011 $2600 Profit” (http://www.youtube.com/watch?v=d7jeGS7pVNk) he clearly entered a trade using the re-entry rules.   When I asked him about it and how that fits in his trading plans, he ignored my question.

Based on my experience and in my opinion, whether or not you take the re-entry signals depends on many factors and including your exit criteria, your trading style, and the chart at the time the signal is provided.  If you have other insights into this, please share them.

A 3-to-1 Win/Loss Ratio?

One of the big sales pitches of the Christos Avatar Trading VIP program is that Toby Alexander will show you a system of trading that will give you a 3-to-1 win/loss ratio.  Toby never shared such a trading plan with the room attendees, at least not explicitly, and every time I pressed him to give me guidance on trading rules with such high expectancy, he never answers my question and if he does he would tell me that I need to create my own trading plan and back test it.  Although I agree that I eventually need to do that, I believe that mentors are suppose to save their clients time by guiding them and directing them in quickly finding such trading rules – which the CAT program promised in its marketing webinars.

So with regards to such trading rules, I have yet to back test all possible combinations of entry and exit criteria on the four instruments that Toby trades mostly (namely, the NQ, ES, 6E, and 6B), so I don’t know for sure if there are such trading rules with such high win/loss ratio. However, I will share here what I found and if you have experiences yourself please share them as well.

By using the SpitFire system I was able back test a trading plan that has an 0.8/1 win/loss ratio. This plan is simple, enter on a yellow dot and supporting TraderTrend bar, and exit when a price structure is broken.  I looked at some of the back testing done by others, and found the highest profitable ratio to be 2-to-1 win/loss ratio if you follow a scalping model (enter on yellow dot and supporting trader trend bar, set a target of 2 points and stop of 2 points).   If you are patient then this system may work well, but don’t take my word for it since I was not the one who back tested it, but do you own back testing on it.

One thing to remember is that the profits for this system on any trade is very limited since you have a fixed target, and most trading coaches will tell you that you need to make your profits run (make the most of your winning trades) for you to be a successful trader, and this system does not allow you to do that.  One of things you can do is trade more than one contract and have the first contract with a fixed profit target and let your other contracts go further, which comes with disadvantage that you will be stopped out more often on these other contracts and lose money on them, and thus reducing your win/loss ratio.

How did you like the Trading Authority Spitfire System?

The Trading Authority develops a number of trading systems that provide repeatable visual indicators for traders to take trading signals and exists.  One of the systems they have is the Spitfire system which is meant for day traders and it provides very clear entry and re-entry criteria in trades and a number of potential exist criteria.  From doing back testing on some of the entry and exist criteria I found the system to have a positive expectancy (i.e., on the long run you will make money if you are consistence and follow the rules).  The key as in any other trading system is to follow your rules and be consistent.

I personally found that introducing me to this system is the best value that I received from the Christos Avatar Trading (CAT). CAT is a reseller of the Trading Authority’s Spitfire system and provides a discount on it.  However, you don’t need to attend the Christos Avatar Trading room to purchase this system or get training on it.  You can buy it either through the Christos Avatar Trading website without the VIP room or find it through other resellers or direction from TheTradingAuthority.com website.  I found that the free training videos the Trading Authority provides on their website are excellent.  I suggest that you look into them and possible download their free trial for the system.

Here is an example chart showing a potential trade using the ES mini 3000 Chart that you could have taken using the Spitfire system that is very profitable.  This trade follows simple rules (sell short when you have a yellow dot and a red TraderTrend bar, and exit when the price goes above the Fibonacci line by 0.25 points).  Note that this is just an example trade, and you WILL have many trades that are not-profitable, so use with caution.



Is Christos Avatar Trading a Scam?

Not exactly!  Toby Alexander, the founder of Christos Avatar Trading is an entrepreneur who found a way to make money in a niche market and he jumped on the opportunity to do so.  The CAT VIP Room and mentorship does provide some value and I believe, if Toby has the ability to help the CAT program attendees he probably will; however, based on my own experience being a member of the VIP room for 2 months as well as my experience attending numerous trading seminars and training, what the Christos Avatar Trading VIP Room and Mentoring program offers is not worth the money that he demands for it.  This is for a number of reasons including: (1) The program did not deliver on everything it promised; (2) I consider Toby Alexander not to be an effective trainer and coach; and (3) Toby often sends mixed messages about trading rules that creates confusion among the VIP members.

One of the main things for me that Toby Alexander promised in his free marketing webinars for this program is online trading demonstrations.  During the 8 weeks I was in the program, there was only one time that Toby entered a trade online and it was mainly to demonstrate the use of Ninja Trader, and that trade was a loss.  He posted about 5 recordings for online trades that show how much money he made on these trades. I found these recordings to be mainly a marketing ploy and did not provide much educational value for trading students.  Also, another promise that Toby made in numerous online free marketing webinars is to provide a trading plan that has a 3-to-1 win/loss ratio and sometimes he throws in a 4-to-1 win/loss ratio.  I did a lot of work trying to find this trading plan and pressed Toby hard to share it with me so I can back-test it and he never did.

The Christos Avatar Trading VIP Room is not well organized and has a bunch of files that you can download and either read or listen to recordings.  He provides some files that show a step-by-step action plan on what to do during his program, but they are often overwhelming and if you do all the steps in this program you will find yourself spending 3 hours each morning just going through his protocols without a sense of direction.  His sample trading plan was from a prior student and it was 10 pages which seems cumbersome for a newbie.

Regarding all the energetic clearing and DNA activation protocols that Toby prides himself by and which I will address in more detail in other posts, I still do not have any evidence that any of this works, and in fact, there is some evidence to the contrary.  After 8 weeks in the program, I was the only person who created a testing plan and performed back testing on it and I don’t attribute my action to the protocols.  This is an indication that all the other attendees still have fears that are stopping them from moving forward.  Further evidence to the lack of effectiveness of these protocols is that Toby took under his wing an inspiring trader by the name of Alex who joined the program over a year ago to personally train him in order to demonstrate that anyone can be taught how to trade. A year later, and as Toby discussed with him publicly on his Thursday Live seminars, Alex was still full of fears, making mistakes and is not profitable in the market.

Although after 7 weeks being in the program I was his “best” performing member, since he publicly said many nice things about the trading plan and back testing that I had done, I still found many inconsistencies in his teachings (will be detailed in other posts), and when I confronted him about them he either ignores my questions, or gives me a simple answer “yes” or “no” without explaining in detail the inconsistency that I noticed.  

So, all in all, although I don’t think it is a scam, I think you can find a lot better training some other places including free training on the website of the company that creates the system that Toby uses, i.e., TheTradingAuthority.com.  Look into this carefully before you decide since there are no warranties on this training and no refunds.