--- title: 'Backtesting a Long-Short Mean Reversion Strategy on NVIDIA (inlc. Fees, Slippage, Spread)' source: 'https://www.youtube.com/watch?v=C-U6PGvZ18o' video_id: 'C-U6PGvZ18o' date: 2026-09-16 duration_sec: 256 channel: 'The Genuine Trader' --- # Backtesting a Long-Short Mean Reversion Strategy on NVIDIA (inlc. Fees, Slippage, Spread) > Source: [Backtesting a Long-Short Mean Reversion Strategy on NVIDIA (inlc. Fees, Slippage, Spread)](https://www.youtube.com/watch?v=C-U6PGvZ18o) ## Summary This video presents a backtest of a mean reversion trading strategy applied to NVDA stock. The strategy uses a combination of technical indicators (EMA, Bollinger Bands, RSI) for entry signals and ATR-based stop loss and risk-reward ratio for risk management. The presenter walks through example trades, equity curves, and key performance statistics, comparing the strategy against a benchmark. ### Key Points - **Strategy Entry Conditions** [00:00] — For a long entry: 10-day EMA above 200-day EMA, price dips below Bollinger Bands, and RSI under 35. Short conditions are the reverse. - **Risk Management Rules** [00:15] — Stop loss set at 4 times the ATR, and the target is a 2:1 risk-reward ratio. - **Backtest Parameters** [00:32] — Starting balance of $10,000 and a flat order fee of $1 per trade. - **Example Winning Trades** [00:52] — One trade netted a profit of 33%, another a profit of 23.41%. - **Example Losing Trades** [01:29] — A median losing trade resulted in a loss of -19.98%, and a random losing trade resulted in a loss of -28.79%. - **Key Performance Statistics** [02:18] — Annual return of 51%, Sortino Ratio of 2.1731, max drawdown of -48.55%, 26 total trades, and average profitability per trade of 21.68%. - **Benchmark Comparison** [03:21] — Benchmark annual return was 74% (higher), Sortino ratio was 2.1796 (slightly higher), and max drawdown was -66.34% (worse). The strategy offers a better risk profile with lower drawdown. ### Conclusion The mean reversion strategy for NVDA shows solid profitability with a 51% annual return and a good Sortino ratio, but it underperforms the benchmark in raw returns. Its main advantage is a significantly lower max drawdown, indicating a more favorable risk profile for traders. ## Transcript Hey there everyone, welcome back to the channel where today we're diving deep into an exciting trading strategy that we're going to backtest together. Alright, let's break it down. We're looking at a mean reversion strategy for NVDA. For a long entry, we want the 10-day EMA above the 200-day EMA, the price to dip below the Bollinger Bands, and an RSI under 35. For shorts, we flip those conditions. And remember, we're managing risk with a stop loss set at 4 times the ATR and aiming for a 2 to 1 risk reward ratio. Simple yet effective. Alright folks, you can see some parameters for our trading environment right here. For instance, we have a starting balance of $10,000 and a flat order fee of $1. Now let's transition into taking a look at some exemplary trades to see how this strategy plays out in action. Here we're trading NVDA USD let check out the results This trade netted a solid profit of 33 Here we got a random winning trade with NVDA USD let see how it stacks up This trade ended with a profit of 23.41%. Here we have a median losing trade with NVDA USD. Let's see how it performs. This trade ended up with a loss of minus 19.98%. Here we have a random losing trade with NVDA USD. Let's see how it performs. This trade ended up with a loss of minus 28.79%. Now let's take a look at how the equity curve developed Now let jump straight into the statistics to see how this strategy stacks up The annual return stands at an impressive 51 showcasing the potential for substantial gains with this strategy. Additionally, the Sortino Ratio of 21731 indicates a strong risk-adjusted return, which is definitely a positive sign for traders looking for consistent performance. The max drawdown stands at a concerning 948.55%, which indicates a significant risk that traders should be aware of when employing this strategy. We executed a total of 26 trades which is a solid sample size for analysis. With an average profitability per trade of 21.68%, this indicates that our strategy is not only effective but also has the potential for consistent gains over time. Now let's take a look at both equity curves of our strategy and the benchmark to see how they battle and develop When we look at the annual return our strategy boasts an impressive 51 but the benchmark outshines it with a staggering 74 indicating that while our strategy is solid there room for improvement. Now, regarding the Sortino ratio, our strategy stands at 2.1731, which is quite good, yet the benchmark slightly edges ahead at 2.1796, suggesting that both strategies manage risk well. but the benchmark has a slight advantage in risk-adjusted returns. When we look at the max drawdown, our strategy shows a drawdown of minus 48.55%, which is significantly better than the benchmark's 66.34%. This suggests that while both strategies face risks, our strategy offers a more favorable risk profile. And there you have it folks, that wraps up our exploration of this mean reversion strategy for NVDA. If you found this video helpful, don't forget to hit that subscribe button and give us a thumbs up thanks everyone have a strategy idea you'd like to see back tested and shared drop it in the comments below using hat back test or vote other strategies you like and it might be featured in the next video happy trading