The sharp upward movements in Crude Oil due to the ongoing energy crisis have caught the attention of many traders. If you're interested in trading futures on this market, you'll find two interesting insights in today's video!

These two strategies in our portfolio have been performing really well since 2017, when we coded them.
Best of all, they're still performing very well several years later!

By watching the video, you’ll discover:
-The rules of the trend-following strategy with entries based on moving averages
-The rules of the intraday mean-reverting strategy
-The real performance of these strategies

Enjoy! 😎

Transcription

Hello everyone and welcome back to another one of our brand new videos. One of the coaches at Unger Academy here and this is our usual chat that we have about the strategies in our portfolio that have performed the best over the past period.

Alright, so today we’re going to be talking about Crude Oil, the futures that tracks the movement of oil prices.

And this commodity in particular has certainly been on everyone’s lips in recent months for reasons related to the energy crisis.

So it could be even more interesting to go and take a look at how our systems have responded to these market conditions, which are certainly worth exploring.

So what I’m going to show you today is two strategies. Let's start with this one up here.

This is a trend-following strategy based on signals generated from the crossing of two moving averages, a fast-moving average and a slower-moving average.

And here we can see the two moving averages. They are calculated at 15 minutes. The fast one is at 30 periods and the slow one is at 140.

Now, these values have been optimized back in 2017, when we first developed the strategy, so there certainly could be values that are perhaps more stable today.

But as I said, this strategy has not been touched since then, so let's go and see the results it produced.

As I said, on the occurrence of a bearish cross...

Well, let's try to expand a little bit to see better.

There, you see the blue line that broke the slower line, which is the purple line, on the upside, and our strategy has entered a long position there.

Conversely, if the blue line crosses the slower line on the downside, we’ll open a short position.

As I mentioned, this is a trend-following strategy and has given good results in the last two years, namely 2021 and 2022, despite the extreme volatility that has been characterizing this market.

You see, it's made a nice $25,000 in profits. Let's look at the annual results as well.

Its performance in 2022 has been very good so far, with an average trade above $240 in the current year.

While overall, the strategy has been able to maintain an average trade of $140, a result that is net of commissions and slippage.

It's also worth noting that over the past two years, that's 2021 and 2022, the short side has suffered much more than the long side, which instead has been the one that "pulled the boat", let's say.

Now, this is certainly due to the sharp rise that there’s been in this commodity, rather than to the type and approach of the strategy that we're using.

Just look at the Buy and Hold and what the results would have been. It’s clear that the equity line short has suffered much more in that kind of context, while of course in a more downward context, as the one that we've seen in the last couple of months, the short side has certainly recovered.

As for the long side, we can see instead that the strategy has been able to take good advantage of the rises in this underlying.

Let’s turn to the next strategy. It’s a strategy that you could say is the opposite to the one that we've just seen.

This strategy buys when the market goes down and sells when the market rises.

This obviously means that it is based on a mean-reverting approach, which is obviously in contrast to the previous strategy, which instead tries to exploit trends by entering in the same direction.

In this case, for example, on a market decline, the strategy entered the market on the break of the previous day's low.

Conversely, for the short trades, we’ll wait for an upside break of the previous day's high.

Here we can see an example. So, in this case, we take the highest high between the previous day’s high and the high of the session five days earlier.

Then, once the price breaks that level to the upside, which in this case happened at this point -- you see, here at the top left of the screen.

Once it crossed that level, the strategy entered the market.

Then, since this is an intraday strategy, all the positions are closed at the end of the day.

This trade was triggered towards the end of the session and so it lasted only just a few bars.

The bars are calculated at 15 minutes. And this is also a strategy that was developed in 2017, and it was able to make some excellent gains in both 2021 and 2022.

In this case, the profits were made by both the long and the short side, with the short trades performing much better compared to those of the previous strategy.

In this case, we see an average trade that is even higher. However, this should be contextualized by the fact that this strategy makes very few trades.

As you can see, it makes only six long trades. And the reason is pretty simple: the trigger, that is to say the entry-level that we need to reach to trigger our strategy, is hard to reach.

Also, it's worth mentioning that generally speaking, reversal strategies are not the most effective and efficient in this market.

So, please be careful when you develop mean-reverting strategies in the energy sector.

In any case, the resulting equity in out-of-sample years is positive.

The profits are approximately $12,000.

So in this video, I've provided with two other types of strategies that you can try to put to work.

Two strategies that have undoubtedly stood the test of time and that are certainly worth exploring further.

So, if anyone among you is interested in the world of systematic trading, I suggest you click the link in the description of this video.

From there, you can watch a free presentation by Andrea Unger, where he will introduce you to his trading method, which let him win the World Cup Trading Championships 4 times. You'll also be able to get our best-selling book, "The Unger Method," by covering only the shipping costs. Or, hey, why not, book a free call with a member of our team for a free strategic consultation.

If you enjoyed this video, please leave us a Like, subscribe to our channel, and go and click on the notification bell to stay updated on the release of all our new videos.

And that's all for today. We thank you so much for watching and we will see you very soon in our next video. Bye bye for now!

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