Trading Systems Tips: Going Short on Mini S&P 500?

by Andrea Unger

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Finding short strategies for the US Stock indexes, such as Mini S&P 500, is not always an easy task.

Due to the bullish uptrend that has been characterizing these markets for years, sometimes it may even be impossible to find effective approaches on the short side.

In this video, our coach Andrea will show you a short strategy for Mini S&P 500 that allowed him to achieve a better-balanced portfolio.

Enjoy! 

Transcription

Hello guys and welcome from Andrea Nebiolo. We have spoken about the difficulties in going short on the MiniS&P several times. In fact, I told you many times that usually on that kind of underlying, so on the underlyings that have a very strong buy-and-hold in a certain direction (as it's the case, for example, with the US Stock indexes and futures) it's extremely difficult to go short because they have a very strong and impressive long bias, so a long buy-and-hold in this sense.

So I had the need, in the past, to have a sort of cover from the other approaches, so from being long most of the time on those underlyings. And I found something interesting I want to show you and I want to share with you guys.

So in a few words, this strategy is a strategy that I coded in 2017 for Mini S&P. It's an intraday strategy and basically it works by finding two levels during the daily session of Mini S&P. The aim is to go short when this level down here is crossed, so in the bar that follows the cross of this level, and eventually you can go long over the other one. I trade this strategy only on the short side because my aim is to cover the long positions of my other strategies. But it's also possible to work on the long side, even if it's not the best approach because this kind of underlying usually prefers the reversal approach.

But anyway, this kind of strategy works by taking the open of the session, so the opening price of the session, and then you can get those levels by adding or subtracting the Average True Range multiplied by a certain number of times (which you can optimize to find the optimal value).

So basically, once this red level is violated, we enter short at the next bar and we keep the position open until the end of the trading session or until the target or the stop loss levels are reached.

So this approach can be interesting mostly for covering other long positions. If you are trading long with different reversal strategies, this one may help you when the market is falling strongly. So you don't have to think that this strategy should earn quite often or consistently, as it is against the nature of the Mini S&P in general.

But let's see how it goes. We can see from the equity curve that it had some very nice periods, as in 2008 when the market used to fall consistently. Then the strategy was quite acceptable, and then - here - it was sideways, and it's been doing the worst drawdown in the very last part, as we can see also here.

But in general, the average trade is quite acceptable if we consider that this is an intraday strategy.

And if we have a look also at the annual period analysis, we can see that in the worst year for the markets in the most recent decades, it has been a quite good year here, and in general, it didn't create any problem in the other years, apart from the 2016 and 2021.

So in general, it's a quite acceptable strategy. As I said before, it should be seen as a coverage. You shouldn't use it as your main strategy or core strategy for Mini S&P, but it can save you in certain market conditions or help you cover your other long positions.

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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.