12 Jul The 3-Moving-Average Futures Robot
The 3-Moving-Average Futures Robot
July 12, 2023
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There’s a very famous trader/educator who’s made a very famous amount of money.
He’s a discretionary trader.
Now, I’ve been told by someone in the business that these results may not be true. I believe they’re true, but, unfortunately, there are supposedly educators out there who trade live accounts but lose money in those accounts in order to sell products in subscriptions. They say they’re trading (and they are), but they’re really selling.
This particular famous trader loves Fibonacci-based moving averages and uses those moving averages to follow trends.
To see if it’s really valid, we can build a simple robot using that methodology.
Discretionary trading from an expert can never be totally validated, unfortunately. And it definitely can’t be replicated.
But a robot can do both.
And we built such a robot back in a March 2023 Newsletter. Here were the details:
3 MA Cross 5-Minute Daytrading Fib Strategy (ES.D)
MAs: 22, 50, 80 simple moving averages
Long Entry: When all 3 MAs are literally above each other (22 above 50 above 80), a trade is taken. The opposite is true for Shorts.
Target: 2x the current ATRÂ when the trade is taken
Stoploss: 4x the current ATR when the trade is taken
Max Trades Per Day: 5
Trading Window: Only take trades between 10:00 and 15:00. Trades can be taken exactly at 10:00 but no earlier and exactly at 15:00 but no later.
Here are some recent sample trades from July 2023:
And you know from the last Newsletter that it hasn’t hypothetically had a losing year since 2020.
How did it hypothetically do before that?
It’s done well. But we’d have to suffer through two tiny losing years.
Of course, any losing year is a problem for most traders.
And the other big potential problem is that the average per trade is low. It’s only +$14. Even though trading costs are included in this testing, most experts say we need $40 per trade on average, or higher. This strategy could suffer if we see bad execution for some reason.
But it is an excellent trend following tool; a strategy like this will do very well in a trending market.
And it lends a bit of credence to any discretionary educator you find out there who trades this way.
In our next Newsletter, we’ll take a look at a system with a gargantuan average per trade number.
Talk 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.