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BOOK YOUR FREE STRATEGY SESSION NOW >>Today we’re talking about trading strategies on the Nasdaq futures, which track the performance of the index of the 100 highest capitalized stocks (technology and non-technology) in the United States. As we know, this market was hit by significant declines and high volatility in 2022.
The strategies we present in today's video have brilliantly exploited these two characteristics and effectively intercepted the market's reversal.
By watching the video, you'll discover:
-The rules of the two strategies, both of which are trend following and were codified in 2018
-Their actual out-of-sample performance (which is better than in-sample!)
-Their outstanding gains in 2022 (much better than Buy and Hold!).
Enjoy! 😎
Hey everyone and welcome back to our usual chat about the strategies in our portfolio that have performed the best over the last period.
So this week, we're going to be chatting about the Nasdaq futures, which tracks the performance of one of the most famous indexes in the world, precisely the Nasdaq, which contains the 100 most highly capitalized U.S. tech and non-tech stocks.
These futures undoubtedly suffered significant losses in 2022. However, they also went through a significant increase in volatility, which means that trend-following strategies like the ones we're going to be looking at today, responded very well to market movements.
Specifically, I’d like to introduce you to two strategies that, as I mentioned earlier, will try to identify and exploit the trends in Nasdaq futures.
Now, this strategy that we're seeing now… which comes from two consecutive stop losses, and of course, you know, that's part of the game… However, this strategy has been able to take advantage of those moves pretty well.
The long positions will be opened when the price breaks through the previous day's high minus 10 points.
On the other hand, the short positions will be opened when the price breaks through (obviously downward) the previous day’s low plus, in this case, 35 points.
By doing so we should be able to, in some way, anticipate the market and the movement that the market will make using levels that we think are sensitive, such as the high and the low of the previous day.
Let's take a look at the performance of the strategy. It was developed in 2018, so we could say, around this time here...
And you can see that it has been able to make some incredible profits in out-of-sample.
All the years have been positive and, most interestingly, 2022 is also very good, especially if we consider the Buy and Hold, which was very bearish.
2022 starts more or less at this point, and as you can see, this market has pretty much only gone down in the current year.
The short side, well it has worked very well, I mean, protecting our account from market declines which, we know, when they happen, can lead to a panic situation of some sort.
And as we can see, this strategy was able to intercept the trend reversal that had taken place in this market.
This is the short side, and we can see that it did better than the long side, which however didn’t do much damage in the out-of-sample in spite of the strongly negative Buy and Hold of the current year.
So let's move on to the other strategy that I’d like to show you today. This is also a trend-following strategy but in this case, we'll identify the levels starting from the opening of today's session and adding to it, or subtract from it, a factor calculated on the ATR.
So, for the long trades, we’ll wait for a close above the opening plus six times the value of the ATR, which is the Average True Range, that is to say, the indicator that measures the average volatility in points over a certain period.
On the other hand, for the short trades, we'll wait for a Close below the opening value of the session minus eight and a half times the ATR.
So, I mean, really basically, we're going to be waiting for a more decided, a more significant drop, to be able to enter the market, as opposed to the conditions on the long side, which are more permissive in some ways.
This strategy has also worked very well.
Here we see the results of the long curve, which has performed pretty well in the last part too, in spite of the significant declines in the market.
But again, it was the short curve that produced the most significant gain for our strategy.
A strategy that, in this case, will close its positions at the end of the session. As you can see, the average trade isn’t massive, but these are already the net results without fees and slippage.
And as we can see, the quality of the short trades has improved a lot in the last period. I mean, the number of the long trades is almost three times the number of the short trades, but we can see that the average trade of the short ones is pretty bigger, pretty larger we can say.
So, overall, this strategy, which was also developed in 2018, has proven to be very effective in the post-programming period.
So you see, these are strategies that undoubtedly all of our students can easily code. So, please go and try them out for yourself!
If there’s anyone among you who’s interested in the world of systematic trading, I recommend that you go and click on the link in the description of this video.
From there, you can access a free presentation by Andrea Unger, or go and get our best-selling book, "The Unger Method", covering only the shipping costs, or you can even book a free call with a member of our team.
And if you enjoyed this video, please be sure to leave us a Like and subscribe to our channel! And please, don't forget to click on the notification bell so that you can stay up to date on the release of all our new content.
And that is it for today. We'll see you soon in our next video, bye bye for now!
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.
