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BOOK YOUR FREE STRATEGY SESSION NOW >>Lean Hogs futures are a fascinating instrument for those who want to trade systematically with little capital.
In addition to excellent downside scalability, this market can be traded with relatively small stop losses making it much more accessible than other futures.
This video features two strategies from our portfolio that have done very well with these futures over the past year!
By watching the video, you'll learn:
The rules of the two strategies, both of which are trend following.
Their real performance
Enjoy! 😎
Hey everyone and welcome back to our usual chat about the strategies in our portfolio that have performed the best over the past period.
Okay, so this week I want to talk to you about Lean Hogs futures, which is the underlying asset that tracks the price performance of farm hogs. This is undoubtedly a lesser-known commodity. And this future is certainly less liquid than the traditional markets but can offer some really interesting advantages for systematic traders.
So today we are going to be looking at two strategies that have shown to work very well on this market. They are both based on a trend-following approach, which means that they open trades in the same direction of trends, and actually, this is the most effective approach for this market.
So, let's take a look at the first strategy. As I said, it is based on a trend-following approach.
This market is only open for a few hours a day, from 8:30 a.m. (Chicago Exchange time) to 1 p.m.
So at the 9:30 a.m. bar, which is the one that starts at 9:30 and ends at 10:00, the strategy places a stop order on the high and the low of the previous bar.
If the breakout is on the upside, we buy, as in this case. While if the breakout within this specific bar is on the downside, we open a bearish position.
The strategy works on a 30-minute timeframe. However, we have added a secondary data series that has a time frame of 1440 minutes. Its purpose is to help the strategy identify the days when to open only long trades and the days when to only open short trades.
The report of this strategy for the last 365 trading days is very positive.
The strategy was actually able to take advantage of the trends in this underlying asset and brought profits of about $8,000.
As I mentioned earlier, this market is less liquid than traditional markets but it has the advantage of being much more scalable. And in fact, you can approach it even with quite low stop losses. In this case, for example, we used a stop loss of just $400, which is undoubtedly a very low value for futures.
Let’s move on to the next strategy that I want to show you today. It also works on the same underlying asset and is based on a trend-following approach.
In this case, though, the trigger, which is the level at which we place our orders, is different from the previous strategy. In fact, we'll use the Donchian Channel, which is a price channel, to analyze the highest highs of the last 12 bars and the lowest lows of the last 12 bars.
The bars are formed at 5-minute intervals, meaning that the last 12 bars will show the highest high of the last hour and the lowest low of the last hour.
In addition, also this strategy is multiday and scalable.
In this case the stop loss is slightly higher than in the previous strategy. It’s around $500, so it's undoubtedly still a very affordable stop loss compared to more traditional markets.
Also, this strategy has shown some very positive trades, especially in the last period. And throughout this period, you can see that its performance is in line with that of the in-sample, that is to say the period where we had started to develop this strategy, which is around 2017.
So, this is the beginning of 2018. And you can see that also in the years that followed the development of the strategy the results were very positive.
So, guys, go and give it a try too! These are really easy strategies to code. And Lean Hogs is a very affordable and scalable market compared to more traditional markets, so all you need to do is try to develop these strategies.
If anyone is interested in the world of systematic trading, I recommend that you go and click on the link in the description of this video. The link will take you to a page where you can go and watch a free presentation by Andrea Unger, or get our best-selling book "The Unger Method" by just paying the shipping costs, or you can even book a free call with a member of our team.
And if you enjoyed this video, please leave us a Like. Subscribe to our channel and go and click on the notification bell to stay updated on the release of all our new content.
And with that, I will see you again soon! 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.
