#154: HOW TO CREATE A QUALITY STRATEGY IN 60 SECONDS

 

 

During more than 10 years of my trading career, I have never seen a more robust and reliable trading setup than the one I’m going to share with you today.

 

In fact, I dare to even call it a universal evergreen trading setup, because I’ve been trading its variations for almost 10 years over and over, and it still makes money.

 

Now, before I share with you what it is all about, one warning.

 

This strategy is for FUTURES INDEXES only. And it works LONG SIDE only. Indexes are a long-biased market, so it is totally ok to use this small built-in edge and explore the best, most universal and most reliable ways to use this to our advantage. Here it is:

 

1. Take yesterday’s close and add reasonable volatility to create a breakout entry-level,

2. Add exit at the end of the week and some reasonable stop-loss.

 

That’s it.

 

Let me show you what I mean.


Here I randomly took the e-mini S&P 500 market, 60-minute timeframe. And all I did was create this piece of code, reflecting the rules above:

Notice, that I used a multiplier of 2.5 for volatility (2.5 * AvgTrueRange). I chose this value arbitrarily, without any reoptimization, because it really doesn’t matter much what value you pick - you mostly arrive at positive results anyway. 

 

 

Then I took another index market, e-mini Dow Jones. I chose the 30 minute timeframe (again arbitrarily, just to prove that the timeframe doesn't matter much either) and also changed the multiplier to 3 (again, totally arbitrarily). So it looks like this:

 

//Calculate the Entry Level

Breakout_Level = CloseD(1) + 3 *AvgTrueRange(14);


Again, an immediate positive result:

 

 

And one example more - I took the e-mini NASDAQ, arbitrarily picked the 120 minutes timeframe and used a multiplier of 1.5:

 

//Calculate the Entry Level

Breakout_Level = CloseD(1) + 1.5 * AvgTrueRange(14);

 

Again, a positive outcome:

 

 


Of course, it would be wise to add some potentially simple (ideally non-optimizable filter) to reduce the drawdowns and add a protective stop-loss too.

 

But either way, this is a very robust skeleton that I have been using for years and made (in a variety of forms) a bunch of money on. And it takes just 60 seconds to get it done.

 

And that is really all. Also, if you want to learn how to create way better strategies than this one, with smoother equity curves and good live performance, and very quickly too, I share a more complete framework from A to Z here.

 

Happy trading!

 

Tomas

 

 

 

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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.