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BOOK YOUR FREE STRATEGY SESSION NOW >>Crude Oil futures present great trading opportunities, and with the arrival of Micro contracts, even traders with smaller budgets or those wanting to minimize exposure can get involved.
In today’s video, we’ll explore two trend-following strategies from our portfolio that, together, have generated over $35,000 in profits over the last two years.
The first is an intraday strategy that delivers an average trade of around $150. The second, built on the Donchian Channel, produces an average trade of $215.
These two strategies have been in our portfolio for several years and have been out of sample since 2018.
Do you want to know more?
Then watch the video right away! You'll discover:
-How the two strategies work
-All the details about their performance
-Some useful information for trading on the Crude Oil futures
Enjoy 😉
Introduction
The Crude Oil futures contract is a go-to for many traders. Both liquid and volatile, offering strong profit potential for those who know how to trade it.
And with the introduction of the Micro Crude Oil contract, even traders with smaller accounts can now tap into this market without taking on too much risk.
Today, I’m excited to show you two solid strategies to trade this future.
Specifically, we’ll cover a strategy based on the weekly inventory data release, which we’ll dive into first, followed by a classic trend-following strategy.
The goal of this video is to give you some actionable ideas and strategies you can test yourself and potentially add to your own trading portfolio.
I’m one of the coaches at Unger Academy, and let’s get started with this first strategy.
Intraday Strategy
To really understand this strategy—based on the weekly oil inventory data—you need to know a bit about the event.
Every Wednesday, the Energy Information Administration releases a report on US oil inventory changes.
It’s a big piece of data that can cause big price moves, and we want to take advantage of that with this strategy.
Since the data is released at 10:30 AM New York time every Wednesday, the strategy is focused on this specific time window.
As you can see, we open a short position just minutes before the report comes out.
The idea is to anticipate the volatility that follows the announcement rather than jumping into the market right as the data is released.
Why? Because at that exact moment, the order book often empties out, which reduces liquidity and increases the risk of slippage or poor order execution.
By getting in before the event, we aim to avoid these issues and position ourselves to capitalize on the post-announcement moves.
This strategy trades both long and short, with entries based on previous highs or lows.
In practice, we’re looking to buy or sell with limit orders at the recent highs or lows formed in the minutes leading up to the report.
The strategy uses a $900 stop loss and a $1,600 take profit, as seen in this example trade.
If neither level is hit, the position is closed at the end of the session.
An intraday strategy because we’re targeting the immediate impact of the data release, so there’s no reason to hold the position past the session.
Now, let’s look at the performance.
Here’s the equity curve for the strategy, with out-of-sample data starting in 2018, around here.
You can see that while performance declined in the out-of-sample period, the system has continued to perform well, thanks to its simplicity.
The long trades, in particular, have performed particularly well.
Only recently have we seen signs of weakness, but of course, every strategy will have its losing phases.
Looking at the short trades, performance has also been strong, but more recently, we’ve seen the opposite trend.
Short trades have generated solid profits lately, as shown by this equity curve.
As for the number of trades, we’ve made about 400 trades since 2010.
That’s not a huge number, but given that we’re only trading once a week, it’s reasonable.
The average trade is a bit skewed between long and short, but it’s large enough to cover any operational costs.
Now, let’s check out the year-by-year performance.
As you can see, this strategy has generally performed well over time, except for 2021, which was a losing year.
However, both 2022 and 2023 were profitable, and as for 2024, factoring in slippage and commissions would reduce the profit, but it’s still solid.
So, let’s wait and see how the strategy performs in the remaining months of 2024 and whether it continues the strong performance we’ve seen over the past two years.
Donchian Channel Strategy
Next, let’s move on to the second strategy, the trend-following approach.
This strategy is simpler in many ways.
It’s built around a 160-period Donchian Channel for entry points.
In other words, if the price breaks the highest high of the last 160 bars, we’ll go long or close a short position.
While if the lowest low of the last 160 bars is broken, we’ll go short or, as in this example, close a long position.
This is the core of the strategy, but we’ve added filters to enhance its performance.
Not every breakout triggers a trade since additional conditions must be met.
Let’s now look at the performance, starting with the equity curve.
Like most of the strategies in our database, this one has been out of sample since 2018, as shown here.
It performed well for a couple of years after development.
But 2022 was a tough year, with a larger-than-usual drawdown.
However, even though it was inactive, we’ve been monitoring the strategy, and as you can see, it’s bounced back strongly.
Recently, we’ve even hit new equity highs.
Looking at the long and short equity curves separately, we can see the long side contributed to the earlier drawdown, while the short side has been more consistent.
As for trade count, the strategy has made about 700 trades, fairly evenly split between long and short.
However, the average trade is higher on the short side, which we could infer from the equity curves.
Still, the average trade of $215 is large enough to cover commissions and slippage.
Finally, let’s look at the year-by-year returns. As we saw, 2022 was a down year, but it’s interesting to note the recovery in 2023, with a gross profit of $28,000.
That wraps up the second strategy. I hope this video has given you some fresh ideas and inspiration for your trading.
Conclusion
As always, feel free to leave a comment if anything is unclear, and if you’re interested in this trading approach, click on the first link in the description.
That’s all for today. See you in the next video!
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.
