The Dynamic Profit Module projects Targets based on Cycle Analysis. In addition to Profit Targets and the New Eighths Tool, there are additional many additional ways the Dynamic Profit Module can improve your results.
Using the new optimization features in OmniTrader, both the accuracy and proﬁtability of our Entry Signals have been dramatically improved. This led us to ask the question: “Is there a dynamic way to manage Exits as well?” Indeed there is!
Stocks and futures move in cycles. That is, they form successive highs and lows as a result of the ebb and ﬂ ow between supply and demand. What if we could accurately predict the next high or low before it occurs? Wouldn’t Exits that adapt to the chart be better than ﬁxed Exits?
The ﬁrst step was to identify the cycles, and to do that we examine the turns in the chart or pivots. By measuring the size of the moves and the time between turns, we were able to predict the next cycle high or low.
Having accurate cycle projections has enabled us to create the Dynamic Proﬁt Module. When activated, it plots the next most likely cycle high or low on the chart. This helps us know the best time to enter a trade on a new Signal. It also enables us to determine the best point to take proﬁts!
The module uses the next projected high or low to generate three Proﬁt Targets (Conservative, Moderate, and Aggressive). The user can place their Fixed Proﬁt Stop at the appropriate level. It’s easy to see where the Stop Loss should be placed to maintain a desired Reward:Risk ratio.
In the The Power to Trade with Conﬁdence Seminar, we show you how to select the best Target, but the Moderate (middle) Target is generally the best selection. It’s also the one we used in the automated Strategy tests described on the next page.
With Dynamic Proﬁt Module, we can ﬁnally unleash the power of the Eighths Tool. The Eighths Tool is similar to a traditional Trailing Proﬁt Stop, except it has “steps” against which Stops are adjusted behind a proﬁtable move.
Normally, the Eighths Tool is used by stretching it across a prior range in the chart (recent high and low.) The Eighths Tool automatically adjusts to the projected target, making it easy to adjust a trade visually using the levels.
Another beneﬁt of this tool is that automated Strategies can use the new Eighths Tool, automatically adjusted to the projected range at each Signal!
The NEW Eighths Tool automatically projects an Eights Tool
from the Signal to the right. This provides the best possible
Trailing Proﬁt Stop, as shown in this example.