#023: MY STUDENT'S STRATEGIES (CASE STUDY #7)
After several index strategies, that use 2 time frames, this time I have for you a strategy that works with just 1 time frame and still, it can offer really nice profits. You don’t need to use 2 time frames to profitable trade. The strategy was originally developed for the YM market, but when one of my students verified it in other markets, the strategy worked in the NQ market even slightly better than in the YM market. And since the strategy has passed all robustness criteria, that I explain in my ebook “How to Become a Successful Trader in 10 Weeks” (will be released during autumn 2016), it is perfectly acceptable to trade this strategy also in a different market than it was developed for.
This is the basic setup for the NQ market:
Market: E-mini NASDAQ 100 (NQ) Main time frame (data1): 15-minute Secondary time frame (data2): - Time template: 8:30 - 15:10 Exit: exit based on indicator, stop-loss or at 15:10 exchange time
(avg. winning trade +228 USD) Stop-loss: 1,000 USD - only protective, barely hit. (avg. losing trade -197 USD)
This equity is from Out-Of-Sample periods, so it can give you really realistic expectations. The equity curve is, as you can see, almost straight line and there aren't many drawdowns:
And here is the strategy in numbers:
The strategy is using pretty small stop-loss and has quite a small drawdown (only 3,415 USD), which makes it a perfect strategy for smaller accounts. The profit factor 1.68 and almost 60% of profitable trades are also really good values for out-of-sample data.
And how does the strategy performs in the market it was originally created for, i.e. the YM market? Well, since the YM and NQ markets are highly correlated, the equity of this system (with the same parameters!) looks similar to the one mentioned above - also pretty nice equity curve:
The market that we use for the strategy development doesn't necessarily have to be the one that we use for live trading. If we find, during the portfolio verification, another market that is even better for this strategy, we can trade the strategy there. Or even on both. The fundamental condition for live trading is that the system has to be tested and has to pass all robustness tests also in all other markets that we want to use for live trading. And this is the main point of this example - to remind you that evaluation in other markets is one of the most important robustness evaluation criteria.
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