Profit from Downtrends in S&P 500: Trend-Following and Bias Strategies

by Andrea Unger

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Are you looking for strategies to exploit the bearish movements of S&P 500? 📉💰🥳

We've got you covered!

The S&P 500 is one of the most liquid markets in the world. Although we tend to trade it with strategies that work mainly on the long side due to its standard movements, significant downtrends such as those that took place last Friday make you realize how useful it is to have some strategies that also work on the short side.

In this video, we show you two strategies - a trend-follower and a bias one - that last week earned us $4,000 by going short on the S&P 500.

Watch the video now to find out how they work!

 

Transcription

Hello everyone! 

I'm one of the coaches of Unger Academy, and I welcome you to this brand new video dedicated to the strategies in our portfolio that have performed the best over the past week.

So this week, I'd like to talk about the S&P 500 stock index. As you know, there's been a lot of talk going on about this market over the last few days, especially after the strong downtrends that occurred last Friday. More in detail, I'm going to show you two strategies that managed to exploit those downtrends pretty well. And this is something we don't see very often because the short side is generally weaker on stock indexes, particularly the US ones such as Nasdaq 100, S&P 500, and Dow Jones. So the very fact of being talking about some positive short trades on the S&P 500 is quite an event.

So let's start with the first system. We can consider it a trend-follower strategy, and it opens the positions when prices break through pivot points. More in detail, we use resistance and support levels for the long trades and the short trades. So the system opens the positions at the breakout of these levels in continuation of the trend.

As you can see, this is a very simple strategy that has been performing pretty well over the last few years. It was developed in 2018 and proved to be very useful in the negative moments, that is when some strong falls occur and there's a significant increase in market volatility.

Here you can see the equity line of the short trades. And what's fantastic about it is that it's even more beautiful than that of the long trades.

So I invite you to try and develop this kind of strategy too because it could be very useful when the market gets very volatile and there are fears and concerns in the markets that could eventually lead to huge losses. In such cases, having a strategy that makes short trades and does it very well, such as this one, is definitely a plus.

Let's move on to the next strategy, whose short side also performed very well last Friday. Some of you may already know this strategy for the S&P 500 market. It's based on a bias approach, and it goes long on Tuesdays and closes the long trades on Thursdays, and then goes short on Fridays.

So this is also an extremely simple strategy that continues to perform pretty well. In this case, the short side, we see it, has suffered a little bit. However, it's still positive. 

The results are not that exciting, but the average trade is still positive, so in the end, it's not that bad. For sure, looking at these results, one may consider the possibility of removing the short trades or, at least, filtering them a bit more. However, as I've already told you, when the market goes down significantly, as it happened last Friday, having in your portfolio a strategy such as this or the previous one that works on the short side, although less than on the long side, is undoubtedly a plus.

But let's also take a look at the equity curve of the long trades, which is really very good. And this is the overall one. 

This strategy was built more or less in this period, so around 2017.

It went through some tough moments, such as here in 2008, for example. But all in all, this strategy continues to work very well. It's a really simple system you can build yourself with just a couple of lines of code, and I've told you the conditions.

So give it a try! Because you know it, the S&P 500, in addition to being the most liquid market in the world, responds very well to different logics and different approaches, from bias to reversal and even trend-following. So give it a try and let me know what you think in the comments.

Below I'm also going to leave you a link to a webinar. This webinar was made by the 4-time world trading champion Andrea Unger. The only four-time world trading champion. 

If you want to learn more about this beautiful world of trading systems, go and check it out!

And with that, our video is over! See you next time! Bye-bye!

 

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.