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BOOK YOUR FREE STRATEGY SESSION NOW >>In this video, we showcase two strategies for trading Gold Futures, each with a different approach: a classic multiday trend-following strategy and a less common intraday mean-reverting strategy.
Both strategies have proven to be highly effective, generating an impressive combined profit of approximately $14,000 since early 2024.
These strategies are perfect for diversifying your portfolio—not just by market – but also by strategy type.
Curious to learn more?
Watch the video now to discover:
-How these two strategies work
-Detailed performance results
-Practical tips for trading Gold Futures
Enjoy 😎
Introduction
In this video, we'll dive into the analysis of gold futures through two strategies from our trading system portfolio.
We're exploring a multiday trend-following strategy, which is the traditional approach for this asset, and an intraday mean-reverting strategy, which is less common but highly effective.
And as you'll see, it plays a crucial role in achieving good portfolio diversification. It's indeed important to diversify not just by instrument type but also, as in this case, by strategy type.
I'm one of the coaches at Unger Academy, and let's look at the basic entry rules for these strategies.
Intraday Mean-reverting Strategy
Let's start with the intraday mean-reverting strategy.
Here, we see an example of a long trade that opened here and closed near the end of the session, as this is an intraday strategy.
What levels does this intraday strategy base itself on?
We consider the highs and lows of the previous session. Take this example:
We wait for the price to drop below the low, and when the price crosses back above this low, we enter a long position. For short trades, we do the opposite, using the previous session's high.
Regarding stop loss and take profit, this strategy has a stop loss value of 1800 and a take profit value of 1600.
Now, I guess some of you are wondering why we are using a strategy with a unfavorable risk-reward ratio. It seems odd, but the key is the strategy's expected value.
Because we must also consider the win rate relative to the total number of trades. In this case, given the unfavorable risk-reward ratio, we likely have a win rate above 50%.
But let's go and analyze this strategy's performance. Looking at the equity line, we see excellent results. This strategy has been out-of-sample since about 2016.
And so, despite a rough period where some traders could have decided to archive this strategy, it has continued to perform well, forming new equity peaks.
Let's compare the long and short sides. On the long side, we see steady growth, similar to the total equity.
On the short side, we notice a period when the system struggled more, clearly coinciding with the drawdown phase of the total equity.
Analyzing the Total Trade Analysis, and more specifically, the average trade and the number of trades, we see that this strategy does not trade frequently.
We have around 650 trades with an average trade of $144, a value that is certainly sufficient to cover operational costs and that is also quite high for an intraday strategy.
Regarding the percent profitable, which we can call the win rate, since it corresponds to the percentage of trades closed at a profit, we have a value above 50%, which is normal given the unfavorable risk-reward ratio.
Now let's analyze the yearly returns of the strategy.
Except for 2019 and 2020, which were negative years, this strategy has performed very well since 2008.
Especially in recent years, such as 2022, when many systems struggled more than usual.
Multiday Trend-following Strategy
Now let's move on to the second strategy. As mentioned earlier, this is a trend-following strategy. Here, too, we consider session highs and lows, but in this case they are calculated on the current session instead of the previous session.
In this case, for example, we opened a short position when the current session low was broken.
To allow these highs and lows enough time to form, we set an operational time window.
So we will only enter a new position at a breakout only after a certain time of the day.
Entering a position right at the session opening would not make sense as the current session's highs and lows have not formed.
This strategy does not have a take profit but has a stop loss of $2,000.
This means that trades will either close with a $2,000 loss or the position will be reversed.
In this case, for example, we went from a short position to a long position when the current session high was broken.
Let's analyze the performance of this system.
Looking at this equity line, we can see it is an excellent strategy that continues to perform well over time.
Despite a sideways phase during this period, the strategy recovered well last year, forming new highs.
Let's also look at the long and short sides, which are more balanced than the previous strategy.
Here are the long and short sides, showing no significant difference between them.
Now let's analyze the average trade of the strategy, which is higher than the previous strategy, which is partly due to the fact that this is a multiday strategy rather than an intraday one.
We also notice that this strategy has a win rate of 45%, meaning more trades close at a loss than at a profit.
Despite this, it remains an excellent strategy because it has an advantageous risk-reward ratio.
Now let's go and take a look at the yearly returns of the strategy.
Except for 2008 and 2020, which were peculiar years, the strategy has performed very well, especially in 2023, achieving a profit of $30,000.
The 2024 performance is also confirming the excellent results of 2023, considering we are about halfway through the year.
Let's wait and see if the strategy can surpass last year's excellent performance in the second half of this year.
Conclusion
Alright, so today, we’ve seen how to profit from the same underlying asset with two completely different strategies.
As we said at the beginning of this video, this is the key to portfolio diversification.
If you are interested in strategies like these or what we do at Unger Academy, I recommend clicking the first link in the description.
That's all for today. See you in the next video.
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.
BOOK YOUR FREE STRATEGY SESSION NOW >>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.
