An Overnight Nasdaq System That’s Thriving

Dec. 9, 2024

Normally, the topic currently on my mind goes in the Newsletter first and then it might go on YouTube.

But this time we’re doing it in reverse.

This week we’re discussing a new system on the NQ (Nasdaq E-Mini) that’s outrageously simple and also fascinating (and already on YouTube).

Why is it fascinating?

Because it focuses only on overnight gains.

We’ve been told by various experts that a massive chunk of stock market gains over the past century have come from overnight bullishness.

Allegedly, the day session–when everyone is frantically pushing buttons or employing algos–is not all that great.

At least, there isn’t as much alpha during the day. (I love it when people say the word “alpha” instead of just saying “profit”. It’s a great way to sound holier-than-thou.)

But is it true? Is the overnight session actually profitable?

This week’s system aims to find out.

As I mention in the videos, this system isn’t my idea. It comes from David Bean and he’s worth checking out. Here’s a screenshot of his post. You can look it up at Capstone Trading Systems (I’m not paid to say that.)

I coded this strategy for testing but no one needs any code to trade it. Here are the rules:

• Buy to open the NQ on the 15M chart at the close of the 16:00 ET bar.
• Sell to close the NQ at the close of the next day’s 9:30 ET bar.
• Only do this on Monday, Tuesday, and Wednesday.
• And only do this if the close at 16:00 is less than the close of yesterday at 16:00.
• Stoploss: $6700 per contract. This is the stop I prefer.

In short, if today is a down day when compared to yesterday, then we can take a trade. This part wasn’t mentioned in the first video, so keep that in mind.

That’s a very simple concept. Does it work?

Here’s the Report trading 1 contract since 2000:

Here’s the Curve:

That’s pretty fantastic.

And here are the Annual Returns:

A few things to unpack.

One, it was incredibly profitable during the Bear Market of 2022. That’s crazy.

Two, there are losing years, but they’re very manageable.

Three, look at how much money this has made recently. On a sample $22k account, there have been some potentially massive winning years.

Just by trading the night session on down days.

Crazy.

So there is something to overnight gains after all.

And this could be traded alone (if you don’t mind small losing years) or as a part of a bigger portfolio.

You can watch the videos on this system here and here.

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.