The Wild 5M Nasdaq Breakout Strategy

The Wild 5M Nasdaq Breakout Strategy

Feb. 21, 2024

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I still love trading videos and people who talk about trading strategies.

I don’t love it when they give half an idea.

Actually, I don’t mind half an idea. I do mind when that half idea isn’t any good and then the whole idea is bad, too.

So I won’t do that here.

Today we’re looking at a breakout strategy on an index. I’ve been told again recently that breakout strategies don’t work on indexes. Let’s find out.

Here are the details.

We’ll use the NQ.D Futures contract, which is the Nasdaq E-Mini during regular trading hours (not 24 hours). Trading costs are built in, as always, and we’ll trade 1 contract each time.

NQ.D 5M RSI Breakout

  • Long Only Entry: When price closes into RSI Overbought (Length 12, Overbought 80)
  • Target: $1,000
  • Stop: $700

Normally, when RSI is Overbought, we’re supposed to Sell. We’re going to Buy instead. And our profit is bigger than our loss, so “good” reward-to-risk zealots will be pleased.

Here are a few recent trades:

And here’s the Equity Curve on a sample $19k account since 2007 via Portfolio Architect:

Remember, people who’ve been trading Futures since the 1990s tell us that we only need to test data from 2007 to now. The way that data was assembled was different before 2007 due to the move from pits to electronic markets. Or something like that.

For fun, here’s the Curve from 2002-2024:

It’s not terrible but it’s not as good as recent times.

Which is very interesting.

Do we care about what happened 23 years ago with data that might not be as good as data post-2007?

Do we care that this strategy has hypothetically returned over 100% in a year (on a sample $10k account) five times since 2015?

Those are good and tough questions.

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.