Automated Trading Strategy #66
This strategy has a backtested win rate of 100% and made $304K for the year on 226 trades.
Important: There is no guarantee that our strategies will have the same performance in the future. We use backtests to compare historical strategy performance. Backtests are based on historical data, not real-time data so the results we share are hypothetical, not real. There are no guarantees that this performance will continue in the future. Trading futures is extremely risky. If you trade futures live, be prepared to lose your entire account. We recommend using our strategies in simulated trading until you/we find the holy grail of trade strategy.
As a quick reminder, our goal is to find the holy grail of automated trade strategy.
We haven’t found the holy grail yet, but we get closer with every strategy. Click here for the most recent performance chart.
We are not all equal. To be clear, we should go out of our way to treat each other as equal, but in the end, we are not.
I learned this as a young athlete. My game was tennis. I’d taken a few group classes and I was better at it than the flute (5th chair), so my mother secured a private coach. I excelled and was promoted to the varsity team where I played first doubles and second singles. My head was huge.
One day we played a team from a school of giants—they put you in the mind of Hitler Youth. They were aggressive, mean (we were taught to be overly polite), they yelled at each other (we were taught to keep comments to ourselves), they were cunning, and in the end they beat us. They swept us all. It was galling, but it also helped to understand a truth in life — we are not equal. Some of us have more athleticism; likewise some of us have better brains. And, in the same way that you can train the body, you can train the mind.
One thing that’s helped me is the spiritual theory of knowledge referred to as Samsara. It refers to a cycle of doing the same thing, over and over and over again. It is the mental walk of the unaware. These are the traders that always buy high, sell low, and then complain about how the market’s rigged. The market always tests its price with these traders.
The same wheel the mind is on for every day life is the same wheel your mind is on when you trade. I made the same mistakes for years until I invested the time required to review my trades from an objective perspective.
Remember, the market is an artificial intelligence — it’s incredibly smart, some would say all knowing. While you’re looking for a way to hack the market via some AI learning tool, the market’s been learning human behavior for decades. Its only job is to find the right price — that’s what it feeds on; that’s what it needs to live and create another bar.
Like a bird of paradise doing a mating dance that has been perfected over thousands of iterations, the market is performing for you.
The flash of yellow you see from the bird in the video above [3:28] is like a trigger — it is meant to excite; likewise, price runs on pretty charts are meant to mesmerize and hypnotize you into a position just long enough to be…well, courted. It only takes a few seconds. The point is, unless you like being stuck (some people find it soothing), you need to recognize when you’re being hypnotized to be a good trader.
A practical way to break the cycle of Samsara in life and trading is to keep a journal that allows you to reflect on your day. It’s an exercise that gives with it the ability to zoom out from your local self, identify your triggers and respond from a state of awareness when it happens again. Examples of market triggers include:
a push above or below a high or low for the day,
an increase in the acceleration/velocity of price,
a push above/below a trend line or level.
Like a bolt of lightning, these are visual triggers meant to invoke a rat brain response. So, today we’re hunting for an indicator that serves as a contrarian marker for visual triggers.
Key Takeaway: Your goal is to figure out a way to do the opposite of what may feel right to your monkey brain. It might be your natural inclination to get in at the top of a price movement or bar — recognize that as a weakness; then take steps to do something different before it happens again. Automating your strategy can also help, which is what we’ll be doing with Strategy 66.
Strategy 66 Description, Command Structure & Download (C#)
With Strategy 66, we’re testing another methodology to boost the win rate. These are the backtest results for Strategy 66, 66a, and 66b over the time period: April 1, 2022 to April 1, 2023 for 7 futures contracts:
The strategy has a win rate of 100%. It also made $304K for the year, $107K of which came from one NQ contract.
You’ll notice the inclusion of HG (copper), MHG (micro copper) and SI (silver). These instruments tested well in the forward test so we’ll be using them more in the future. By using slight variations in the same strategy, along with seven different instruments from micros, metals and equity futures, we’re also able to diversify the portfolio in a way that should improve forward results.
Now let’s get into how you can create this strategy for yourself.
Before I provide a description of the strategy, screenshots of the strategy builder in NT8, and a download, I want to take a moment to explain the strategy and the indicators we used.