Introduction
Hello and welcome to this brand-new video on the top-performing strategies in our portfolio.
Today, we’re going to analyze two trading systems on the DAX.
These two systems have been out of sample for a lot years, more precisely since 2017 and, as you’ll see in this video, they’ve proven to be robust and reliable over time.
First, let me introduce myself. I’m one of the coaches at Unger Academy, where we develop automated trading strategies and train aspiring traders who want to learn this kind of approach.
Let’s dive into the first system.
Multiday Reversal Strategy
It’s a multiday strategy, classified under the reversal and mean-reverting category, which captures short-term market excesses both up and down, waiting for prices to reverse their direction and trying to exploit that trend.
In this case, these levels are the highs and lows from a few sessions prior.
Since this is a mean-reverting system, trades are filtered by some criteria that identify price expansion situations. This is the exact opposite of what we do to filter trades in breakout systems, where we look for price compression before a trend resumes.
As for exits, positions are held open for a few days, which is typical for multiday systems, with standard risk management including stop loss, profit target, and breakeven exits.
Speaking of breakeven, as you probably know, this kind of exit lets us close a trade at break even if it reverses after reaching a certain gain but not the profit target, canceling our gains.
Interestingly, breakeven, which usually doesn’t work well in trend-following and breakout systems, might be very useful in mean-reverting systems because they work against the trend.
Now, let’s look at the strategy’s performance.
Since 2010, the system has earned about €455,000 with a maximum drawdown of around €87,000.
This high value is definitely due to the large size of this future.
Thankfully, this market offers smaller, very liquid contracts like the Mini and the Micro, which is 25 times smaller than the full contract.
This way, we can significantly reduce the risk we take.
Regarding other metrics, let’s check the average trade.
It’s a substantial average trade, around €1,000.
The performance over the years is quite steady, with some difficulties in 2018 and especially in 2021, where we reached the maximum drawdown, as shown in the equity line.
It’s noteworthy that after these tough years, the system returned to profitability and hit new highs, especially in the last two years.
Multiday Trend-Following Strategy
Now, let’s move to the second strategy. It’s also a multiday system, but in the trend-following category.
The system’s core is based on the well-known Bollinger Bands.
What are they? They identify a volatility channel that encompasses prices and is built around a moving average.
So, basically, we go long when prices break above the upper band of this channel and we go short when they drop below the lower band, following the trend.
This is filtered through our pattern libraries and risk management with stop loss, profit, and breakeven.
Let’s look at the system’s metrics.
Since 2010, the strategy has netted €592,000.
Like all trading systems, there were less successful years, leading to a maximum drawdown of about €85,000.
As with other systems, this value would be much lower using mini or micro contracts.
Especially if, as we recommend at the Unger Academy, you include this system in a well-diversified portfolio.
Conclusion
Alright, so today, we’ve shown how to profit in the DAX market with two strategies of completely different logics, demonstrating the flexibility of this future.
If you’re interested in learning how to build automatic trading strategies to profit in the markets, click the link in the description.
From there, you can watch a video by Andrea Unger, get our bestselling book, "The Unger Method", by covering only the shipping costs, or book a free call with a member of our team.
See you in the next video and happy trading to you all!
