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BOOK YOUR FREE STRATEGY SESSION NOW >>In this video, we discuss DAX and, more specifically, two strategies in our portfolio that have been out-of-sample since 2017 and are continuing to perform well despite the recent difficulties in stock indexes.
The first strategy takes advantage of a known recurring behavior of the DAX and only trades long, while the second is a reversal strategy.
By watching this video you’ll learn about:
- The rules on which the bias strategy is based
- The rules on which the reversal strategy is based
- The real performance of these strategies
Enjoy the video! 😎
Hey everyone! One of the coaches of Unger Academy here and welcome back to our usual chat about the strategies in our portfolio that have been performing the best in the last period.
Alright, so this week I want to talk to you about the DAX market, and I’d like to show you two strategies. Let's start with this one above. It is a bias strategy that is familiar to many people.
Essentially, the rules of this strategy are really trivial and could be summarized in one or a few lines. The system trades only long and the positions are opened at 5:15 p.m. and they are closed at 9 am, that is to say when the cash session of the DAX stocks opens, so at that moment we'll close our trades. This is to take advantage of the so-called "bullish bias" of this market during the night hours, so basically during those hours when the market should be closed or, in any case, should trade fewer contracts than the rest of the session.
So, this strategy will only make long entries, as already mentioned, at the stroke of a given time and it will close the long position at the stroke of a specific time that is 9 am.
This strategy has been performing pretty well despite having already gone through several nasty market drawdowns. In fact this is a long-only strategy, meaning that it only makes long trades, so when faced with large market declines it obviously may suffer a little bit.
Let's take a look, for example, at the Covid period or at the last period, where, as I told you, there has been a bit of a downturn in the equity markets. This strategy was developed in 2017 and, as you can see, it continues to work to this day. So, try to take a look at it if you still don't have this kind of strategy in your portfolio.
Alright, let's turn to the next strategy. It also works on the DAX and has been out of sample since the year 2017. However, this time we're talking about a reversal strategy that opens short positions when the market rises and long positions when it falls, such as in this case, for example. So, as I said, this is a reversal strategy.
We are using a 15-minute timeframe. The entry trigger is the false breakout. So we wait for a close below the previous day's low and consequently a close above this level to enter long.
While to enter short we wait for the opposite situation, so we go short when there is a false breakout of the high of the day before, as happens in this case here. Let's maybe go a little wider on the bars so you can see the example.
Here was the previous day's high at this level here, made toward the end of the previous session. After that, the market opened above this level. It never closed below it, at least not in the time window that we are considering. So here, when it returned below within our trading time window, the strategy went short.
I've got to say that this strategy is doing quite well. In the last period, it has managed to take some very interesting take profits, although, as mentioned before, this sector in the last period has also shown some fatigue due to the big declines and political and geopolitical tensions, as we all know about.
This strategy, as I told you, was also developed more or less around this date, in 2017, and it has certainly fared quite well in out-of-sample years as well. Of course, we can see that the shape of the equity line in out of sample isn't exactly like the one we see in the in-sample period. However, despite that, I can tell you that the reversal approach has been one of the most profitable ones on the DAX, at least in the most recent years.
Alright, if there is anyone among you who is interested in the world of systematic trading, I suggest that you go and click on the link in the description of this video. From there you will be able to watch a free presentation by Andrea Unger, or get our best-selling book by just covering the shipping costs or even book a free call with a member of our team.
If you liked the video please be sure to leave us a Like, subscribe to our channel and again, go and click on the notification bell so you can stay updated on all our new content.
And with that, we will see you in our next video! Bye-bye everyone!
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.
