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In general, it is easier to create strategies to trade only by going long. But if you want to have a balanced portfolio that can withstand unfavorable market conditions, the number of long-biased strategies and short-biased strategies should be evened (unless you create strategies trading both long and short).

One of the short-biased strategies I would like to present you is a strategy trading in the natural gas (NG) which combines 2 timeframes - 15-minute and daily. Usually, for energies you need a slightly bigger trading account, as the drawdowns can be quite high, but this is not the case. It is just $4,680. And some other characteristics are also quite interesting; let’s take a look at the them:

  • Market: Natural Gas (NG)

  • Main time frame (data1): 15-minute

  • Secondary time frame (data2): Daily

  • Time template: 8.30 - 14.30

  • Profit factor: 1.80

  • Win %: 60.97%

  • 164.33 USD

  • Exit: stop-loss or at 14:30 exchange time (avg. winning trade +605.42 USD)

  • Stop-loss: 1,800 USD - only protective, barely hit(avg. losing trade -536.42 USD)

Usually short-biased systems make a low number of trades. And this example is no exception to the case. In almost 10 years, the system has done 351 trades, making it about 35 per year (about 2 trades every 3 weeks on average). I prefer to have a slightly larger amount of trades per year (about 40), but if other characteristics are looking good (and of course it passes all robustness tests), there is no reason why this system shouldn’t make the cut and be part of your portfolio.

Let’s take a look at the equity curve:

The beginning looks really promising, almost $30,000 profit in the first 50 trades is a good start, but the rest of the equity curve is a little bit more flat and every 100 trades it is making about $10,000. And since it makes 35 trades per year, its average annual profit is about $3,000. This is not a lot, especially with a $5,000 drawdown, but at least the recovery from the drawdown was pretty quick and it is a good way to diversify your portfolio.

Now let’s see how this system looks in numbers:

The overall net profit of this system is almost $60,000 in 10 years, with quite a nice profit factor of 1.80. The number of trades of 351 in 10 years could be a little bit higher, but it is still acceptable. In energies you usually don’t have problems with the average trade value. This system has an average trade of $164, which is enough to cover transaction costs. Usually in energies you will struggle with drawdowns that are too big, though it is not the case for this system.

At this point, I usually share with you the performance of the system in other markets, as a good cross-market performance maximizes the probability that the past backtest performance of the strategy is not just a result of over-optimization (or sheer luck). This system was tested on crude oil (CL) and gold (GC) and didn’t really perform well. This could be a small warning sign that the system is not that robust. But performance in other markets is not the only robustness test there is, so as long as it passes all the others, you can happily add similar systems to your portfolio.

Click here to learn more about the workflow I teach and start creating similar systems by yourself today.

Happy trading!


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What others are saying

"Tomas is one of the most creative traders I know. He is able to generate unique trading ideas and elegant solutions to system development challenges."

Andrew Swanscott,

"Tomas has been a professional trader for more than a decade and I have had the privilege of monitoring his accounts in action since 2006. His systems are performing as some of the best I have ever monitored and executed. I have been in the trading industry since 2002 and worked with many developers from all over the world. Tomas is definitely the one to consider."

Martin Lembak,

Systems Trading Expert,


"Tomas is a professional trader, who for the last 10 years has specialized in developing trading systems. We have been tracking his trading systems for about 5 years and they generally show very robust, stable and above average performance. Striker is pleased to work with someone like him - a real professional with enthusiasm and deep knowledge of trading."

William Galwas, President Of Striker Securities, Inc 

"Personal consultation with Tom helped me to re-evaluate the complexity of my robustness testing and optimization processes. Plus, it has helped me with a specific plan on how to take things forward. It has given me some great ideas on how to avoid overfitting and make my testing more robust and provided tips on low hanging fruit in terms of the best markets to trade for intraday/short-term breakouts."

Craig Peters,

semi-advanced trader,

United Kingdom 

"Tom's approach to Automated Trading Strategies design, tests of robustness and portfolio diversification is really unique. He has been a professional trader for many years and the depth of his understanding of Breakout strategies and Market Internals is hard to find elsewhere."

Antonin Fisher,

Hedge Fund Manager,

Czech Republic 

"Tom´s systems and trading approach do really work and can bring good, stable and reasonable returns. I can highly recommend him as a teacher."

David Hruby,

Trader, Czech Republic 

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Author: Tom Nesnidal (more about me
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