The Idea
Nasdaq rarely goes down too many days in a row before bouncing back for a few days. And as the song goes: 3 is the magic number. To increase our chances of the downward momentum being exhausted, we add an entry condition that requires a bar with a big body. This strategy is tested with CFDs but should work just as well on any Nasdaq-100 futures.
Setup for Backtest
Market: US Tech 100 (Nasdaq 100)
Contract: 1 € per point
Broker: IG
Testing environment: ProRealtime 12
Timeframe: Daily
Time zone: CET
No fees and commissions are included.
Result
Total gain: 15 508.0 €
Average gain: 54.8€
Total trades: 283
Winners: 212
Losers: 71
Breakeven: 0
Max drawdown: –1 528.2 €
Risk/reward ratio: 1.2
Total time in the market: 30 %
Average time in the market: 10 days, 6 hours
CAGR (10 000 € in starting capital): 2.71 %
And how did you work out the 1:2 R you claimed, without a stop-loss to quantify?!
You think so?
Anyway if the €1,500+ drawdown you found on theoretical testing, even with no allowance at all for dealing-costs, commissions, spreads, etc., is 15% that still means you’re using an account of at least €10,000 (actually more) to trade for just €1 per pip?!
Well, this strategy is backtested from 1995-2024 which means that the R/R is calculated on all closed trades from that period, just because this strategy doesn’t use a stop loss doesn’t mean it doesn’t exit trades. Most mean-reversion strategies shouldn’t use stop-losses at all, it only decreases the performance. The drawdown is calculated on a 10.000€ account and yes it is not worth it if you only trade this strategy alone. This strategy is meant to be combined with other uncorrelated strategies like every systematic portfolio.
The 10.000€ account is enough for this strategy, with some uncorrelated strategies combined you can probably get the max DD down to half pretty easily.
No - I was just making the point that this person has been a member for 3 days, is a commercial member posting commercial content, is giving truly frightening advice, and yet even by his own admission, after what he calls “backtesting” without any allowances at all for dealing-costs, he stated that you’d need a 10,000+ account to trade at 1-unit per pip!!
(Up to you whether you think he actually knew he was saying that, or had even worked it out at all.)
That would mean that to trade 1 lot of a currency-pair/USD ($10 per pip), you’d need at least $100,000.00.
Who trades spot/CFDs with $100,000.00?!
And he’s advising people to trade with no stop-loss!!
There’s several people I’ve come across here that trade this way and say they’re successful or it works for them. No way to prove it of course. And I don’t know the size of their account or risk management.
They’re a mixture of a few self-acclaimed heroes who have “cracked it” (in spite of posting almost entirely losers, lol) and mostly just people promoting or marketing something, aren’t they? You can see from their usernames and websites and how they’re trying to draw traffic to a Youtube channel or something similar, or collect email-addresses or whatever.
No real trader needs to or wants to do any of that stuff.
All that’s a sure sign that someone’s income actually comes from selling to “you and me”, not from trading.
You never do, do you? Unless you keep asking.
They’re all “successful” until one day they suddenly disappear without even bothering to say “oops”.
Look through the history of every trading forum on the web and you’ll see the same thing.
Nothing unusual, obscure or clever. I risk 0.5% - 1% per trade (depending on which system the trade is - I trade two).
I work out the position-size after seeing how wide the stop-loss is.
I decide where the stop-loss is really simply, too: it’s a pip beyond the last swing low or swing high.
Nothing sophisticated or complicated from me, sorry!
I am not selling anything, everything I show you is for inspiration because that is what I wished I had more of in the beginning. I am not a believer of “I have worked it all out” trading is a constant journey where you will have to improve and test new strategies and ideas every week. I am showing what have worked for me, this doesn’t mean it has to work the same way for you. There are as many ways to trade as there are stars in the sky so to think that there is only one kind of way to trade isn’t reallt gonna do anything better for you. I only have results from around 2 years back on this account so that is what I can show you if you want to see a graph for some reason. I have been trading for 5 years, the last 2 is using a systematic approach and I have been profitable so at least this has worked for me.
I understand my strategies, I know when they will close and why. Some have volatility filters. The main strategy to manage risk is using a python program to test how different strategies work together, some gold, some nasdaq, some cac40, some crude oil, some Dax40…is there a risk for all indices to go down at the same time, yes. Is there a risk for all commodities and indices to go down at the same time, yes. Is there a risk for all different methodologies (MR,TF, breakout) to go down at the same time, no. I manage my risk using diversification, this is through type of strategy, timeframe and asset class.
