Hey everyone, one of the coaches of Unger Academy here, and welcome back to this weekly video in which we talk about the strategies in our portfolio that have performed the very best in the last period.
As always, I invite you to please subscribe to our channel, leave us a “Like” and click on the notification bell to stay updated on the release of all our new videos coming out. Thank you so much!
Well, this week we’re going to be talking about a topic that has proved to be particularly challenging in recent years, and that’s currencies. Many of our strategies have suffered over the last few years, whether being bias or trend-following or even reversal, which was a pretty strong logical approach in the currency market.
In today’s video, however, we’re going to be talking about this very sector because there are two strategies in our portfolio that are defending themselves pretty well, perhaps we could say that they’re fighting tooth and nail, in this general decline that is common to the whole currency sector.
If you haven’t already done so, I invite you to try and see how difficult it has been to get good equity curves in recent years. This probably could have been caused by a shock due to the Brexit, which as you well know goes back to the vote, we’re talking about the Brexit referendum of 2016 which had somewhat disturbed not only the currency market of the British pound…. But, obviously, the whole currency market from that date onwards started to definitely struggle more than other markets that instead continued in their trend.
Specifically, I’d like to talk to you about the pound market, so the British Pound. Here, as always, we use futures, so the exchange rates are always against the US dollar.
The first strategy applies to the British Pound, namely the future called British Pound. The strategy performs both long and short trades and it’s a bias strategy which we’ve also seen some time ago.
It is based on some very simple rules and like all bias strategies of this type, it could really be written in a very few lines of code. The general conditions are as follows.
We open long positions on the first day of the week, so the first session, on Monday at 6 am exchange time, and we go short on Thursday at 5:30 pm exchange time. The exchange of the currency futures we’re using is the Chicago Mercantile Exchange, also known as CME.
The exits of the long and short trades takes place at the same time as the opposite entries. So, on Thursday at 7:30 am, before selling short on this market, we close our long trades. And on Monday we close our short trades at 7 am.
So, we enter long on Monday and close the position on Thursday, and we enter short on Thursday and close the position on Monday.
Obviously, we have also set a stop loss and a profit target. In this case, the timeframe isn’t very important because, as previously said, it’s a bias strategy and so changing the bar frequency doesn’t make any important differences.
This is the equity line of the system from 2008. As previously said, this is one of the few strategies that have continued to perform pretty well also during the out-of-sample period.
This strategy was coded more or less in this area, here in 2018, and as you can see, after being sideways for some time, it continued in its run confirming that there could probably be a very clear weekly bias on this market.
let’s move on to the next strategy, which is another mainstay of the currencies sector, and we’re talking about the Euro-Dollar future, so the Euro FX, that is to say the future that replicates the trend of the Euro-Dollar currency pair.
This strategy also makes both long and short trades, but in this case, we’re talking about a reversal strategy because we’re going to identify false breakouts and then enter against the trend.
So, if the market breaks through the low of the previous day and then comes back above this level (the low of the previous day) then we buy.
Vice versa for the short trades. If the market close exceeds the previous day’s high and then returns below the previous day’s high, the strategy opens a short position.
Unlike the other strategy, in this case, the timeframe is important. You can see it here on the top left: we are using a 15-minute timeframe, so we wait for a bar close below and then respectively above the level in order to identify a false breakout, as if the market was saying “I made a breakout…. No, I was wrong, I’m going back”. So, this is clearly a countertrend strategy.
The report of this strategy over the last year is good, as I mentioned earlier. Despite this, we can see that it also struggled in this period, between 2020 and 2021, but the end of 2021 was more successful bringing the strategy to the highest levels of equity.
So you can definitely give it a try! As I told you, it may not be very simple, but you have all the tools at your disposal to begin setting up an automated strategy.
As always, I invite you to please leave us a “Like”, subscribe to our channel and click on the notification bell to stay updated on the release of all our new videos.
In the description of this video, you’ll find a link to a completely free webinar by the only 4-time world trading champion Andrea Unger, who will explain step-by-step how to become successful on the financial markets.
And with that, thank you so much for watching this video and I will see you soon! Bye-bye!
