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BOOK YOUR FREE STRATEGY SESSION NOW >>In this video, we discuss two strategies that are performing very well in soft commodity futures and represent an excellent choice for enhancing your portfolio diversification.
Both are trend
following strategies, but the first focuses on cocoa futures and the other on coffee
futures.
Each has produced an excellent average trade value (around $180) and together, they have already earned over $11,000 since the beginning of the year.
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 tips for trading soft commodity futures
Enjoy watching!
Introduction
Hello and welcome to our latest video where we’ll dive into our portfolio strategies.
Today, we'll zero in on some lesser-known markets: Coffee futures and Cocoa futures.
These are part of the "soft commodities" class, which also includes sugar, cotton, and orange juice futures, all traded at the ICE exchange.
These markets are super interesting because they really don’t move in sync with the stock indexes, even though they’re not that well-known, they could well fit into your portfolio.
With that said, I'm one of the coaches at Unger Academy, we teach you how to build automated trading strategies for all futures markets.
Strategy on Cocoa Futures
Let's now move on to analyze the first of the two strategies.
This strategy trades cocoa futures in a 5-minute timeframe and a secondary data series with a daily timeframe.
It's a typical trend-following strategy that jumps in on breaks of the previous day's highs or lows and usually holds positions for a few days, unless it hits the stop loss or profit target sooner.
Just a heads up: this market, like other soft commodities, really responds very well to trend-following strategies, even with simple entry triggers like the ones we use in this system.
So, you don’t need super complex codes or strategies to make a profit.
In this case, the strategy’s trades are filtered through specific patterns from our proprietary libraries and volatility filters.
Now, let's take a look at the metrics. We see that the system has made around $103,000 from 2010 up to now, with a pretty low max drawdown of just about $5,700.
In the Periodical Analysis, we see all years have been closed at a profit, except perhaps 2020, which ended with very limited gains.
Looking at the average trade, we see it's around $184, which is pretty solid, especially since cocoa futures aren't exactly one of the bigger futures contracts out there.
As usual, let's take a look at the equity line, which is really impressive, especially this past year, it’s done exceptionally well on the long side, boosted by a significant rise in the raw material prices, just like we can also see in the Buy and Hold section.
Strategy on Coffee Futures
Now, let's take a look at the second strategy, focusing on coffee futures. This one also operates on a 5-minute timeframe and it encompasses a secondary data series using a daily timeframe.
It's a trend-following strategy, similar to the cocoa one, but it's designed for intraday trading.
The entry triggers involve breaking the highs and lows calculated on a number of N days.
The trades can only be opened during a specific trading window and they are held until the end of the session.
It should be noted that, like with cocoa futures, the sessions for this instrument are not long. Indeed, they are quite short, lasting just a few hours.
This means the highs and lows that are generated between one session and the other are significant levels because there is enough time between sessions.
Therefore, breaking these levels generally produces good entry signals.
As with the other strategy, the trades are also filtered through some patterns from our proprietary libraries to filter out the least profitable trades.
Checking out the Performance Report, you’ll see that from 2010 to now, the strategy pulled in about $150,000 with a maximum drawdown of just $7,400.
Digging into the Periodical Analysis, every year comes out on top. No losing years at all!
And if we zoom in on the average trade, which is a key metric in trading strategy analysis, the system’s making almost $180 per average trade,
which is stellar for an intraday strategy that only keeps positions open for just a few hours.
Lastly, a quick peek at the equity line shows it’s really impressive, especially how it’s been cranking up profits in the backtest, with a notable boost post-covid, from 2021 to the present.
Well, that's all for today. If anyone among you is interested in learning more about the world of trading systems and automated strategies, I suggest clicking on the link in the description of this video. From there, you can watch a free presentation by Andrea Unger, get our bestselling book "The Unger Method" for just the shipping costs, or you can book a free call with a member of our team.
If you liked the video, please leave us a like, subscribe to the channel, and click the bell to stay updated with our content.
Thank you for watching and see you next time!
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.
