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BOOK YOUR FREE STRATEGY SESSION NOW >>The CME-listed Gold Future responds well to a variety of strategies, and thanks to the presence of the Micro contract, it can be approached even by those with limited capital.
In this video, we'll show you two strategies in our portfolio that are performing very well in this market. They are both intraday and enter against the trend on false breakouts.
By watching this video you’ll discover:
- The rules of the two mean-reverting strategies
- Their real performance
- An example of a strategy that recovered after a difficult period
Enjoy! 😎
Hey welcome back everyone! One of the coaches at Unger Academy here and welcome back to our usual chat on the strategies in our portfolio that have performed the best over the past period.
Alright, so this week I want to talk to you about Gold, a market that has been getting quite a lot of attention recently, thanks to the recent data about inflation. As we know, this asset is supposed to be a safe haven asset both in situations of high volatility and panic, as well as in situations of high inflation.
So today I want to introduce to you two mean-reverting strategies that open positions in counter-trend and close them by the end of the day, so we’re talking about two intraday strategies.
Let's start with the first one that I want to show you. As I’ve already told you, this is a mean-reverting strategy, so it will enter against the trend, so if the market goes down, it opens a long trade, and if the market goes up, it open a short trade.
We developed this strategy using a 15-minute timeframe, so with this timeframe as a reference, we wait to see a false breakout. So in the case of the long trades, we wait first for a breakout - such as this one here - of the low of the previous day, and then for a return of prices above this level, and at that time we go long.
It’s kind of like saying: the market made a fake breakout, it was wrong in some way, so I'll enter in the opposite direction. Which in this case means that I go long.
And vice versa for the short. In this case, as you can see here, we wait for a breakout of the previous day's high. You see? The market broke that level but it was a false breakout, so the market crossed under it and we entered short.
This strategy has been out-of-sample since 2018 and is continuing to perform very well. Look, in the last period, it has had an extreme upswing. This market has rebounded more consistently, and this strategy has been able to take advantage of that as well.
The system's average trade is around $135. This is the total number of trades. Now let's take a look at the annual results as well. You can see that in 2022 we're making really good profits, I mean, look at that: profitability percentage 80%.
Alright, let’s move on to the next strategy that I want to show you today. It is also for the Gold market, and also enters at the false breakout on the lows or highs of the previous day. In this case, for the long side we use false breakouts calculated on 5-minute bars, whereas for the short side we use false breakout calculated on 15-minute bars, like in the previous strategy, as they're certainly more effective.
As I mentioned before, this strategy has the same trigger level as the previous one, so it waits for a false breakout either on the low or the high of the previous day.
We can also see that this strategy, too, after a period that was certainly not easy, was able to recover everything it had left behind. This was also an out-of-sample strategy since 2018. As you can see, however, in this case, the first few years of out-of-sample were not too lucky, but then in the last few months, in this time frame, the strategy returned to perform very well.
This is to say that one year at a loss, or possibly even two years at a loss, does not preclude, let's say, the validity of our ideas and our strategy, which if we used common sense when we developed it, surely our strategy will also work again tomorrow, as is the case with this strategy.
So this strategy has an average trade of $100. Look at the short side. The short side suffered much more in out-of-sample. That’s why the average trade performed badly.
Let's go to the equity line. I'd like to emphasize that these are results already net of fees and slippage. Additional costs have been added to this strategy to more effectively simulate, say, what could be the live.
Here this is the short equity line. As you can see in the in-sample, it did work well. In out-of-sample, on the other hand, also due to these big rises in Gold during this period, it definitely failed to excel.
So, you guys, you know, go and give it a try too! It could very well be worth it! Gold is a very liquid market that can be approached using different types of strategies, not only reversal, as we've seen today, but also trend-following and bias strategies, they also perform very well. So, go and give it a try, and let us know in the comments what you think!
If there is anyone among you who is interested in the world of systematic trading, I suggest that you go and click on the link in the description of this video. From there you will be able to watch a free presentation by Andrea Unger or why not, even book a free call with a member of our team, and go and get our best-selling book too by just covering the shipping costs.
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Again thank you so much for watching! We look forward to seeing you soon in our next video, bye-bye!
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.
