In this video, you’ll discover two strategies based on this indicator that have leveraged the recent movements of the German stock index, DAX, very well.

Working with one contract, both have achieved an excellent average trade of over €750.

From 2022 to the present, the first one has earned over €103,000, and the second over €62,000.
Want to learn more?

Then watch the video now! You'll discover:
-How the two strategies work
-All the details about their performance
-Some useful information for trading on the DAX futures

Enjoy watching 😉

Transcription

Introduction

Hello and welcome to this brand new video where we will analyze the strategies of our portfolio.

Today, in particular, as you can see from these two charts, we will focus on two strategies built on the DAX future, the main European stock index.

Both strategies enter positions at the crossover with the Bollinger Bands, which in this case are used with a trend-following logic.

This means that we will go long, so we’ll buy, at the crossover with the upper band and go short, so we’ll sell, at the crossover with the lower band. Exactly as you see in these two examples.

I’m one of the coaches at Unger Academy, and without further ado, let's go and start by analyzing the first of the two strategies.

Analysis of the First Strategy

In this case, we see that the strategy opened a short position precisely at the crossover with the lower band.

After that, the price moved in our direction. At that point, the stop loss was moved to the entry price, which was then touched again, and consequently, we exited with a breakeven stop.

Let's now take a look at the strategy's performance.

And here we see a very linear equity line, apart from a small drawdown phase that occurred in 2018, after which the strategy recovered quite well.

Let's now take a look at the long equity and the short equity.

The equity on the long side also grows steadily, while regarding the short side equity, we can notice that it experienced a slightly more difficult period compared to the long side, which clearly contributed to the drawdown we see in the total equity.

Let's now look at the number of trades and the average trade of the strategy.

Regarding the number of trades, we see that the strategy has made approximately 1000 trades in the past, which are well balanced between the long side and the short side.

Indeed, here we can see 500 trades, while here approximately 500 trades as well.

Regarding the average trade, we notice an average trade of €750, which in this case is well balanced between the long and short side and is large enough to cover the costs related to trading this underlying asset.

At this point, let's look at the annual returns of the strategy.

And here we can see that the strategy performed well throughout the period considered, except in 2018, where it lost €24,000, which clearly coincides with the drawdown we previously saw.

But otherwise, as we have already said, the strategy recovered very well, earning even in the out-of-sample phase, especially in 2022 and 2023, where it made respectively €55,000 and €48,000.

Analysis of the Second Strategy

And now let's go and take a look at the second of the two strategies.

Regarding this second strategy, we see that it made a long entry at the crossover with the upper band, which in this case was closed with a profit of €6,350.

Let's also in this case take a look at the strategy's performance starting from the equity line.

Regarding the equity line, in this case, too, we see an equity line that grows steadily, albeit a bit less regularly than the previous strategy.

Consider that this strategy has been out of sample roughly since 2018, so more or less from this phase onwards, and we see that it went through some difficult moments before recovering, especially in the last two years, forming new equity peaks.

Let's also in this case take a look at the long equity and the short equity.

And on the long side, well, we see a very similar situation to the previous one, as it also grows steadily.

While on the short side, we see that it's a bit struggling especially in the last years.

At this point, as usual, let's evaluate the number of trades and the average trade to see if this strategy can still be used for live trading.

And regarding the number of trades, we notice that the strategy makes a smaller number of trades, approximately 880 trades that are well balanced between the long and short side, and slightly more trades on the long side.

Regarding the average trade, it's very similar to the average trade of the previous strategy, so €750.

And in this case, too, it's large enough to cover the trading costs, so commission costs and slippage.

At this point, let’s take a look at the annual returns of the strategy.

And here we see that in the in-sample part it performed very well, it struggled a bit in the first year out of sample, so in 2019, and then in 2021, but otherwise seems to be a very stable strategy.

As for 2024 it's currently at a loss, but it's a value that I wouldn't consider right now, given that only five trades have been made.

So I'd say let's give the strategy some room to see if it can confirm the excellent performance of 2022 with €34,000 and 2023 with €28,000.

Well, the strategies presented today show that using Bollinger Bands on the DAX with a trend-following logic yields good results and seems to be an excellent edge to exploit.

With that said, that's all for today. I'll see you in our next video!

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