An “Evaluated” System on Gold

May 1, 2024

A few years ago, a “guru” approached me about a system on Gold.

I hadn’t done a lot of testing on Gold at that time, but I did have a trend following system I’d worked on.

Nothing came of that meeting, but I kept the system on a Workspace.

I’ve been watching it trade since.

And watching it trade, as we discussed in the last Newsletter, is the Holy Grail of Testing.

Here are the details for that system:

Price Action Breakout on Gold (405-Minute)

• Entry: Buy when price breaks above the high of the past 50 bars. Do the opposite for Shorts (sell below 50-bar lows).
• Target: $3000 per contract.
• Stop: $1200 per contract.
• Break-Even: when profit reaches $700

It’s a pretty simple trend following strategy applied to an instrument that really trends. Seemed like a good idea.

How’s it done?

Here’s the Equity Curve trading 1 contract since 2000:

Not bad.

And  here’s the Curve since it went into the Evaluation process:

What do you think?

It’s definitely lost since it’s been built and had a losing year in 2023 (when the stock market was way up).

But it’s also roared back in 2024, hypothetically making over $18k in just four months.

Does the Evaluation Period look like the rest of the Curve?

I think so. Do you?

If you do, then this is potentially a viable strategy.

And in our next Newsletter, we’ll pair this system with something that might make it look better.

Talk to you soon.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.