Two Week synopsis of Apex “Trend Catcher” trading Nadex Bull Spreads – 04/20/15 – 05/01/15
When Trend Catcher first came out the thought was that it was not meant to be used with Nadex Bull Spreads. I first started using Trend Catcher with Futures and quickly fell in love. Later on Darrell told me how you could trade Trend Catcher with Spreads. Very excited about this, I decided to conduct a two week test run with Apex Investing’s Trend Catcher and use it to trade Nadex Bull Spreads.
What is “Trend Catcher”? I thought for a moment and tried to define the Trend Catcher in my own words. I found myself coming up woefully short and I did not want to put it into a box so I asked the creator himself, Darrell Martin. Here is what he said: “A system designed to catch the (immediate) trend in the market. Whether that trend is for 20 points or 3, it’s designed to catch either, with rules that allow you to keep trading so you don’t have to choose between scalping and trending. The system molds to the market versus having set targets or set trails, it has rules that allow for both simultaneously. Trend Catcher can be used on futures, forex, stocks, CFD, forwards, and Nadex Spreads (modification on binaries, most prefer spreads over binaries - usually GC (gold) and NQ (US tech 100).”
I am glad I asked because I would have left out a few of those details but I whole heartedly agree with this description based off of my limited experience.
The test was conducted in my demo account and I set some parameters to help track performance. Some of those parameters changed as the test went forward but only to allow for better samples of executing trades or to get more opportunities. The system rules actually evolved even during the short time that I was testing the system, but each new evolution ended up being a positive change that improved the efficacy of the system. Over the two weeks I learned so many things. All to my benefit as a trader, not only for applying the system to spreads, but for trading in general.
Overall I am very pleased with the results from trading Spreads with the Trend Catcher.
Here are the highlights:
After trading from the hours of 0630 to 0800 PST [1.5 hours] every day, with a couple exceptions for two weeks, I netted $285.20 on two contracts per entry; or $142.60 if trading a single contract per entry. That’s not too shabby considering the learning and evolving I went through during the trading attempts. I think if I had the rules down consistently, I probably could have added at least another 3rd in profits on average.
- Net $285.20 after 2 weeks only trading 1.5 hours a day
- 4.43% gain on starting capital
- Gold Spreads definitely worked best [lower bid ask spread] also NQ looks promising
- 29 total trades
- 14 profitable trades; 15 losing trades
- 48% win rate and 52% loss rate
- Average profit $59.54; Average loss -$36.56. Almost 2 to 1 profit to loss ratio
- Largest single profitable trade $158.40 or $79.20 on a single contract about 80 ticks
- Largest losing trade -$71.60 or -$35.80 on a single contract
- After figuring out the tighter stops rules my average loss per trade dropped to -$23.60 or -$11.80 on a single contract entry
- Expectancy or [Average Profit per Trade]: $9.83
Lessons learned and observations
When I set out to trade this system I wanted to see how it would do trading just from the US market open 0930 to about 1100 EST. The reasoning behind this was twofold, I still have a 9 to 6 [Pacific Time] job and wanted to be able to trade before going to work. Being on the west coast this is ideal as I can trade from 0630 to 0800 PST and still make it to my cubicle hell on time. Secondly, the majority or market volume happens during 0930 to 1200 during the US session on most of the markets I wanted to trade. If you are going to try to catch trends, you need volume and volatility. Considering I am only trading for 1.5 hours the results are impressive to me. I don’t need to sit in front of the computer and trade for 8 hours to make my daily profit goal. In the beginning I felt I had the basic rules down. However things can change quickly and in the interest of always growing and improving I added some new rules that were handed down from APEX right in the middle of my test. Part of the new rules included using the MVP trend arrow to identify a possible new trend and the implementation of tighter stops. These new rules helped. The default assumption became that I would scalp for 10 ticks unless the MVP arrow indicated a potential longer trend. This worked very well, the system positioned me to stop out at a small loss for the realization of several small profits to net a profit and also allow me to catch some major trending moves. In many cases the Chop Filter combined with the Trend Catcher allowed me to enter a major move minutes before the move took off. There have been even newer rules implemented since I ended this test. Scalping entries like the “slingshot” and the “Elevator”. These new rules afford a trader even more entry opportunities even above the basic rules. I am working on learning these rules now.
Using Apex Trend Catcher with Nadex Spreads I found to be easy enough to implement. I usually trade through the Apex Spread scanner and the Nadex exchange website. I use the Apex “stop trigger” to enter at a designated price according to the rules and also use the Apex stop trigger to define my “stop losses”. One of the cool things about the Trend Catcher combined with the Apex Stop Trigger is that it enables you to trade off of the widest end of day expiration spread available for your chosen market and at the same time not worry about the large potential risk. Once you enter a position you just bring up a stop trigger and set your “stop loss”. The advantage to using the widest daily spread is that you get a near one for one tick or very fast moving spread in relation to the market and usually do not have to pay a large bid ask spread. Using the widest daily spread is ideal for scalping, as well as catching large trending moves.
The most important lesson I have learned and magnified by this experience has to be the proper structuring of a risk management and capital management plan. Darrell Martin teaches the 5% rule. I have adopted the 5% rule for my trading and it makes trading psychologically, and fiscally much easier to cope with. Structuring your trading capital to be able to take at least 6 trades in a row on the same market and only absorb max a 5% loss is paramount. If you are not implementing something like the 5% rule, just stop trading and figure out a way to equalize your risk and give yourself a strong rule set to let you know when to stop trading whether it be at a loss or in a profit. The 5% rule gives you the confidence to keep trading and know that if you had a very difficult day and lost all 6 trades you would only lose max 5% of your account.
Thinking about the results I am very pleased. When you consider several factors, they highlight how “forgiving” the system really is. For example when you consider that I changed so many variables and made several learning mistakes, I still netted some decent money for the two weeks. Remember on Nadex Spreads, one tick or pip is worth $1 per contract when you consider that I was only trading for 1.5 hours a day and even missed a couple days, I pulled in $142.60 for two weeks on a single contract. I have no doubt that when I dial in my entry and exit executions this profit number will go up on average. As I continue to grow my account I will multiply the contracts. How does 5 contracts per entry sound? Profit like $142.60 X 5 contracts = $713.00 and so on.
Another observation that l like to think about, the Trend Catcher was originally designed for use trading Futures, Forex and Stocks where you can use NinjaTrader’s “Chart Trader” and enter and exit trades instantly right off the charts. Using the Trend Catcher for Nadex Spreads while not difficult by any means, it is cumbersome by comparison when trading Futures directly through NinjaTrader with the Trend Catcher system. That is exciting because when you consider that trading one Gold futures contract you are making $10 a tick, these results could have easily been $1426.00 for the two weeks on a single contract. Not bad for just jumping in and trading!
As a system to enter and exit the market it certainly lives up to its description. I found that it does in fact let you scalp and catch the long trends. The system does allow you to trade the markets in any condition whether it be trending or choppy. One of the other important aspects of trading with this system is it gives you the confidence to know when to take profit and where to set your stops. There are several ways to trade the markets and trade trends and take advantage of spreads, however I have seen several traders struggle with where to take profit and how much to let the market breathe when the market starts to go against their position. The Apex Trend Catcher takes all that guess work out of the equation for you and can make for the closest thing to stress free trading [shout out to KJ from the APEX Elite room where I first heard “Stress free trading” in reference to the Trend Catcher]. 
In summary, if a rock like myself can do this and make it work, what are you waiting for? Be inspired, go out and dominate some Nadex Bull Spreads with Trend Catcher! I will definitely continue to use the Apex Trend Catcher to trade Nadex Bull Spreads! I find it simple to execute and highly effective.
Thank you for reading!
Some Visual Media to help tell the story:
Trading log notes:
Trade tracker:
Equity Curve:
A day I decided to sleep in and the entries i missed! 
Caught a nice big move on Gold: 
Part of my radar screen:
