#025: MY STUDENT'S STRATEGIES (CASE STUDY #8)
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DISCLAIMER:  Futures trading systems and commodity trading bear a high degree of risk. People can and do lose money.
Hypothetical results have many inherent limitations. Past performance does not guarantee future results. 

 

ACTUAL RESULTS SHOULD BE VIEWED WITH CAUTION, BECAUSE PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

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#025: MY STUDENT'S STRATEGIES (CASE STUDY #8)

 

The strategy I have prepared for you this time is a strategy suitable for small accounts. The strategy is designed for E-mini S&P MidCap 400 (EMD) market, 15-minute time-frame, it is long- biased and the maximum drawdown is just 2,450 USD. That means that when you follow the rules I have described in this article, you can start trading this strategy with 10,000 USD account. And the stop loss is just 400 USD. This is rather low stop loss for an automated strategy.

 

Here are some basic figures about this strategy:

 

  • Market:                                            E-mini S&P MidCap 400 (EMD)

  • Main time frame (data1):             15-minute

  • Secondary time frame (data2):    60-minute

  • Time template:                               8:30 - 15:00

  • Exit:                                                  stop-loss or at 15:00 exchange time                                                             (avg. winning trade +480 USD)

  • Stop-loss:                                         400 USD (avg. losing trade -327 USD)

 

The equity that you can see below is based on the Out-Of-Sample intervals and includes all transaction costs and slippage. So it is really realistic equity curve of what you can expect when trading it live. It starts with a little drawdown (about 1,500 USD), but this happens almost every time you start trading new system - it almost immediately goes to a drawdown. Approximately in the middle of the equity curve, there is a flat period of about 30 trades between trade number 120 and 150, which, in reality, means 8 - 9 months. That might be too long for someone to bear, but after this period, that equity starts going up again. Exactly for periods like this one you need other, low-correlated systems in your portfolio.

 

 

Here you can see the system in numbers:

 

When going through the report, you can notice really nice profit factor 1.84, the percentage of profitable trades reaching 56% and really nice 122 USD average net profit from each trade. The total net profit almost 35,000 USD in 7 years means almost 5,000 USD per year on average which is twice as much as the 2,450 USD drawdown.

 

Let’s take a look at the performance of this system in another market than just EMD.

 

 

 

When the same system is applied to S&P 500 (ES) market, also 15-minute time-frame, the equity is not perfect, but we can use it as a confirmation that the system is profitable also in other markets than just EMD. And still, it was able to make almost 20,000 USD.

 

Overall, this system can prove to you that you don’t need 50,000 USD trading account to start with and that with some effort you can develop really nice strategy even for a small account.

 

By clicking here you can learn more about the workflow I teach and start creating your own similar systems today.

 

Happy trading!

 

Tomas

 

Click here to read more success stories.

 

 

 

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