Meet Dan Yaklin, a veteran retail trader from Dallas, Texas, USA. In this video, he explains Multiple Entries Trend Following (METF) – a mechanical 0DTE options selling strategy that tries to catch the intraday moves on SPX.

SUMMARY: The METF (Multiple Entries Trend Following) strategy is a mechanical 0DTE options approach focused on SPX moves…
– Six fixed trades per day using credit spreads on SPX.
– EMA-based signals: Sell put spreads when 20 EMA is above 40 EMA, or call spreads when below.
– Automated trading eliminates emotional bias.
– 1:1 risk-reward ratio with stop losses set at twice the premium.
– Combines with MEIC (Multiple Entries Iron Condors) strategy to smooth equity curve and reduce drawdowns.

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Dan enters six trades at set times throughout the day, all on SPX. He uses an automated bot to enter and exit the trades. In this way, he completely removes emotions as a factor in his strategy.

The results are consistent and impressive: Dan has seen a Compound Annual Rate of Return (CAR) of 50% during the year he has traded the strategy. The max drawdown has been 8.5%.

For Dan, there is also another attractive aspect. He trades the strategy in parallel with a 0DTE Iron Condor strategy. He has found that the two approaches complement each other nicely and that he sees a smoother total P/L graph.

More about that later in the article.

Learn all about METF in this video

METF summed up

Let’s dig in to the specifics of the METF strategy and how Dan trades it

– It is a 0DTE – zero days to expiration – strategy on SPX, the option version of the S&P 500 index. All trades are opened and closed on the same day.

– Dan enters the trades at six set times throughout the day: 12:30, 1:00, 1:30, 2:00, 2:30, and 2:45 Eastern Standard Time (EST).

– He will sell credit spreads on SPX with a width of 25 – 35 aiming to receive a credit of $1.25 – $2.5.

– He uses the one-minute interval EMA – Exponential Moving Average – to decide if he will sell a put credit spread or a call credit spread. If the 20 EMA is above the 40 EMA, he will sell a put credit spread. And opposite: If the 20 EMA is below the 40 EMA, he will sell a call credit spread.

– A stop loss is set at 1X the premium received. In other words: If the credit spread is sold for $2, the stop loss will be set at $4 dollar. The loss will then be equal to the premium received, in this case 2 dollars. The trade will be held to expiration if the stop loss is not hit. This gives a risk-reward ration of 1:1.

– Dan sets the stop loss on the spreads. But as the longs become worthless in the late afternoon, he will change the stops to be on the shorts only.

– Dan uses Trade Automation Toolbox to enter his trades based on the set rules. In this way he eliminates human emotions and coincidence about the timing of the trades.

Why those entry times?

“I try not to over-optimize my trading. I just picked those times, and have stuck with them,” says Dan. He did, however, run backtests when he started, and found that these six times worked well.

One consideration, though, was that he prefers to trade later in the day. “One reason is that the risk is over a shorter period of time than if you enter early in the morning,” he says.

Discretionary vs mechanical trading

Dan is 100% mechanical. He enters his trades at the exact same times every day, instead of trying to discretionary choose the best moment.

Why has he decided to be so mechanical?

There are two reasons, says Dan.

The first is that since he runs several accounts, it is not practically possible to trade discretionary.

But the second, and more important reason, is that he has not been convinced that trying to trade discretionary will improve the results over being 100% mechanical.

He says he has compared himself to other traders who trade the same strategy in a more discretionary way. “When we put our results side by side, I do not see the benefit,” he says.

More details about the results of METF

Dan Yaklin has traded the strategy for one year. He reviews the results in more detail in the video…but for your convenience, here is the more detailed graph of his results from June 2023 until June 2024.

The black graph is the S&P 500 index, the blue graph is METF, and the red graph is the drawdowns of the account.

The risk profile of METF

We asked an how he would rate the risk profile of his strategy – with 1 being “Very low risk” and 10 “Very high risk”. He gave it a 5, pointing out that the strategy does offer some downside protection. He points out that the Calmar for the METF he shows in the video is 5.98%, and the Calmar for SPX at the same time was 2.15%. So the reward for the risk for the METF strategy was more than double that of buying and holding the S&P 500 index.

The worst that could happen with METF

One question I will always ask in my video interviews is this: What is the worst that can happen with this strategy?

Dan answers that the worst-case scenario is that you have all your trades on after 2:45 PM with none of them having been stopped out. Then a black swan event happens, moving the market dramatically in seconds. In that case you could lose your entire spread width of all your trades.

“For that reason, I do not risk my entire account. I do not risk anymore than 50% of my account. “

Combining METF with MEIC

Dan Yaklin also trades a different strategy called MEIC – or Multiple Entries Iron Condors.

MEIC is a market-neutral 0DTE Iron Condor strategy that is very similar to my own 0DTE Breakeven Iron Condor strategy. There are many versions of the strategy, but the main rule is to sell multiple iron condors throughout the say and set the stop loss on each side separately equal to the total premium received.

Dan Yaklin allocates his capital 50/50 to both strategies, trying to capture the value of both being market neutral (MEIC) and trend following (METF)

And his conclusions are very interesting:

“What I have found is that if I do both together, I get a smoother equity curve with smaller drawdowns than if I am trading each one individually.”

Another approach to METF

Another retail trader using the METF strategy is Tammy Chambless, also from Dallas in Texas.

Tammy runs the 0DTE trading group Quantum Options on Facebook – with a parallel Discord channel. In fact, Tammy was the one suggesting that I interview Dan about the METF strategy.

Tammy also trades both MEIC and METF. And she publishes the results of both strategies in the Facebook group on a daily basis.

But while Dan Yaklin sticks to his initial trade entry times, Tammy adjusts them every month based on the backtest of the last half year.

We will not compare their results here, just point out that there are different approaches to the same strategies.

Backtest of entry times

But let us, at least, include the backtests of the best entry times of METF. Tammy Chambless publishes these every month in the Quantum Options group on Facebook.

Here are her study of the best entry times – as of September 29, 2024 – if you use the 20 EMA vs the 40 EMA metric. The study goes six months back.

Tammy’s approach is to replicate the best entering times of METF during the last few months.

METF: A summary

So what will be the best? To stick to the same entry times – or to change every month according to the results from the last few months?

I do not know.

But I do suspect that you will get the best results if you trade both an Iron Condor strategy and a trend-following strategy simultaneously. And that you consider the two methods together.

At least, that is the hypothesis for now.

Do you want to learn more? The METF strategy is discussed regularly in the Quantum Options Facebook group.

What about you? What is your experience?