Copper Futures: 2 Effective Strategies (Bollinger Bands + False Breakouts)

by Andrea Unger

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There's a very liquid future on the metals market that can easily be traded using different types of strategies and relatively low stop losses.

It's the Copper future. 

In this video we'll show 2 mean reverting strategies that are performing very well on this future.

By watching the video you'll discover:

- The characteristics of the first strategy, which uses Bollinger Bands for entry.

- The characteristics of the second strategy, which enters on false breakouts

- Their real performance over the past period

Enjoy! 😎

Transcription

Hey everyone! One of the coaches at Unger Academy here and welcome back to our usual chat on the strategies of our portfolio that have performed the best in the last period.

Okay, so this week we’re going to be talking about the Copper future, which we know is a very important raw material.

This future is very liquid and belongs to the metals sector, so that of gold and silver, for example.

This market lends itself very well to be traded with the three basic logics that we know, so bias systems that exploit recurrent behaviors, trend-following strategies and mean-reverting strategies, such as the ones that we're going to see in this video.

So let’s start with the first one. This strategy uses the Bollinger bands. We're on a 15-minute timeframe. You can read it at the top here, just to remind you all.

This strategy will enter both long and short upon the occurrence of an exit and consequent re-entry within the Bollinger bands. In order to identify, for example, an entry, we can add the indicator to our chart.

Here it is. And if we zoom in on our chart - perhaps the bars can assist us better – we'll see that in this case, to enter short, here the entry occurred in this bar, namely at the re-entry of another close within the upper band.

So, there was a breakout of the bands, here where you see this big green candlestick. After that, the closes were all outside the upper band.

Then when a bar or a close returned below the upper band, the strategy went short. Vice versa, when we want to enter long.

Here, for example in this case. We have a very strong candlestick as well, though this time it's out of the lower band. Then in the next bars there was a re-entry and the strategy entered the market.

These are the annual results of the strategy. As you can see, it has done quite well. It's been out-of-sample since 2017, so that's no small feat given that 5 years have already passed.

Only one year of these 5 years has been in loss, namely 2019, which we will see was a particular year on this market for mean-reverting strategies. But even 2009 wasn't a very positive year in terms of backtest.

This is the total equity line since the beginning of the backtest, so since 2008. The out-of-sample period started more or less in this area, and you can see that it has fared absolutely brilliantly.

Let's now move on to the next strategy. It's also a mean-reverting strategy. In the last period, you can see that it didn't do very well, since it took 1… 2… 3… 4 stops in a row. However, we need to say that we set a very tight stop loss of just $400, which means that 4 stops on this strategy are worth less losses than it would be in other strategies.

We could even say that these 4 stop losses could be equivalent to only one on most of the other strategies which use higher stop losses.

But, as mentioned earlier, this market can also be approached with quite tight stop losses and this strategy is the proof. Indeed, it has worked very well over the years.

It has also been out-of-sample from this period here. Initially it had a bad period but then it has recovered very well and even touched new historical highs.

Let's take a look at the annual results as well. As you can see, 2019 was also negative for this strategy, and 2022 is also negative, however 2021 performed extremely well.

For those who may have doubts, these results are already net of commissions and slippage.

I forgot to tell you that this strategy enters on a false breakout, so we'll wait for a breakout on the lows and highs of the previous day and then enter the market on returning above or below the predefined level.

If there is anyone among you who is interested in the world of systematic trading, I suggest you click on the link in the description of this video. From there you’ll be able to watch a video of Andrea Unger, or get our best-selling book covering only the shipping costs. Or why not, book a free call with a member of our team.

Please remember to leave us a Like, subscribe to our channel and click on the notification bell in order to not miss any new releases.

And with, I'll see you in our next video. Bye bye to everyone.

Need More Help? Book Your FREE Strategy Session With Our Team Today!

We’ll help you map out a plan to fix the problems in your trading and get you to the next level. Answer a few questions on our application and then choose a time that works for you.

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Andrea Unger

Andrea Unger here and I help retail traders to improve their trading, scientifically. I went from being a cog in the machine in a multinational company to the only 4-Time World Trading Champion in a little more than 10 years.

I've been a professional trader since 2001 and in 2008 I became World Champion using just 4 automated trading systems. 

In 2015 I founded Unger Academy, where I teach my method of developing effecting trading strategies: a scientific, replicable and universal method, based on numbers and statistics, not hunches, which led me and my students to become Champions again and again.

Now I'm here to help you learn how to develop your own strategies, autonomously. This channel will help you improve your trading, know the markets better, and apply the scientific method to financial markets.

Becoming a trader is harder than you think, but if you have passion, will, and sufficient capital, you'll learn how to code and develop effective strategies, manage risk, and diversify a portfolio of trading systems to greatly improve your chances of becoming successful.