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BOOK YOUR FREE STRATEGY SESSION NOW >>Today we’re going to show you an effective strategy on the Soybeans Future developed by a member of the Unger Academy.
The core structure of the system comes with the training materials of our programs. This trader added several elements that helped transform the core structure of the system into a complete and effective strategy.
By watching the video you'll learn:
- the basic rules of the strategy
- the additional elements (filters and position closing mechanisms)
- the in-sample and out-of-sample performance of the system (with a very interesting equity line!)
Enjoy the video!
Hey everyone, welcome back!
The equity line that you see on the screen is the result of a trading system on the Soybeans future that was developed by one of our members.
I'm one of the Coaches of Unger Academy and in this video, we’re going to analyze the peculiarities of this strategy.
Now, Soybeans are undoubtedly one of the most liquid grain commodities in the Chicago market. As mentioned in the introduction, this strategy was developed by Francesco, one of the members of the Unger Academy… and I can assure you that he's not our R&D manager Francesco Placci!
Now Francesco focused on the most distinguishing feature of the Soybeans market, which is the ability to follow a pre-existing trend. The strategy is based on both long and short breakout entries in response to a price breakout in the previous session.
The positions are managed with a break even stop, a monetary stop loss and a take profit, all combined with a time exit after about three sessions. There is also a progressive reduction of the stop loss and take profit, but we can overlook it.
What's more interesting are the filters that regulate the entries. Indeed, these filters are designed to detect, in a certain sense, a compression of volatility, and this is a characteristic that we know is typical of markets before a trend explosion.
The basis of the script is provided together with the training material, but Francesco added his own personal touch, adding the time exit and a few other tricks, a filter that prevents trading in January and some other things.
Lastly, the monetary stop loss used here is $600. This is quite a low threshold for an overnight strategy such as this one, so you might end up hitting the stop loss even several times in the same day. Look at 28 April 2021, for instance, when the strategy entered three times taking three stops in a row.
This is a sharp breakout strategy and can result in these rather bad days but we've seen the equity line, so over the long term the strategy could pay off.
A very low stop loss could also lead to other problems, such as for example exiting a position in the same bar where it entered, something that should be avoided to avoid making mistakes during live trading.
But despite the presence of these exits and these small errors, I can assure you that the equity line is very good and the system's parameters are quite robust.
The system was created in June 2021 with data from the end of May, and this date coincides precisely with the end of my chart.
So, let's go and upload the data from June 2021 until today. Let's go to "Today" to see what the strategy has done in the real out of sample.
You'll see that there are many trades. The average trade has even improved slightly. Let's look at the performance report year by year. And you’ll notice that in 2022 the strategy made four trades, all in the first few days of February, since there is a filter that avoids trading in January. And these 4 trades did quite well, because even though they lost $1,750 they also gained $3,350, which means a net gain of $1,600 without considering commissions and slippage. If you include a couple of ticks per trade per contract of slippage, you see that it's still more than $1,300-$1,400 in 2022 alone.
So, the strategy with the parameters we've just seen has performed very well in the out of sample too, so I'd say that we can call it a typical Unger Method strategy. Not because it was developed starting from a template provided in our training program, but because the approach to developing and optimizing the parameters was based on the rules we use to develop our systems.
If you need any help to start investing in the markets with a systematic approach, just like the one we've just shown in this video, then I’d suggest you click on the link below. It'll take you to a page full of very useful resources. You can sign up for a free presentation by Andrea Unger, our founder and the only 4-time world champion of real money trading, get our best-selling book "The Unger Method" paying only postage or even book a call with a member of our team for a free consultation.
Finally, I'd like to remind you, if you haven't already done so, to subscribe to our channel and click on the notification bell to stay updated on the release of all our new content. And if you liked this video, please leave us a “Like”!
See you soon with another tip for your next project! Until then, 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 >>Hi, I'm Francesco Placci, a professional trader since 2005 thanks to the systematic approach to the markets.
My skills range from trading on index futures to bonds, from stocks to commodities, with a particular focus on volatility and options, which I consider to be among the most versatile and fascinating instruments available to traders.
After an experience with leading Italian credit institutions where I learned the basics of institutional finance, I became a successful independent trader, with great personal satisfaction.
Founder of Algoritmica.pro, in 2019 I joined Unger Academy as head of Research and Development.
