Gold Seasonal Strategy — Step-by-Step Guide & Transcript

[00:00] You won't believe how much money you can make with a simple seasonal strategy. Seasonal strategies should be a part of any trader's portfolio. And in this video, I will show you one simple strategy,

[00:12] two line of codes only, trading the gold futures, making lots of money. Starting right now.

[00:25] Hello everyone, my name is Ali KC and thank you for joining me on StatOasis channel. where we discuss finance, investing, algorithmic trading, and everything else in between. We want to trade robust strategies inside portfolios to make money in the financial market.

[00:41] If you are new to this channel, make sure to subscribe, hit the notification bell, so you don't miss any of the great content that I post daily on this channel. Also, it would be amazing if you can smash the like button, share the video with others,

[00:53] as this will help Google to push the video to other traders, other investors, so they can get the same value out of these videos. Seasonality started on agriculture, future products, back in the 70s and 80s,

[01:07] and actually there is a fundamental reason behind them. But now we can find seasonality in every instrument in the financial market, most instruments in the financial market. Now, when you find seasonality, that's not a guarantee that it's going to follow through every single time,

[01:23] But it gives you an edge that if you follow it, then you can make a profitable strategy out of it. And currently, I follow seasonality through a tool called SeasonX.

[01:35] And SeasonX has about 27,000 plus instruments in their database. And they range from currencies, commodities, stocks, and indices all over the globe.

[01:48] and you can actually join for free, and you get, I think, 40 instruments and 10 years worth of data. But if you decide to buy the subscription, I have a 20% discount for you, and you can find that in the link below the video.

[02:03] So, if we go to Goal Futures, this is the seasonality dashboard we have, and I'm going to pull a 25 years of data. And if you detrend the curve, we can see very simply that there is a seasonal pattern in January up to February, and then from February to March down, and then somewhere in July till end of August, and then back October to beginning of November down.

[02:33] And actually here you can, if you go to pattern, this is something picked by the algorithm. And we can see these are the years since 97, I put 25 years.

[02:45] And this is the median profit per trade, 3.07%. And if you annualize that, that's about roughly 30% per year. And we are with a win percentage of 72%.

[02:59] So for example if I pick January 14th to February 1st we can see the annualized return is up Of course we are making less money but because we spending less time in the market so the annualized return is higher And this is a short seasonality pattern in gold where so this is the opposite so our

[03:20] win percentage is 76%, and we are annualizing almost 26%, with a median return of 1.37% per trade. So this is against any 6% win percentage and annualized at 22.

[03:36] And the media return is 2.62%. So again, this is a very good pattern for gold. Now, all these patterns, of course, are excellent. The problem with those patterns, I mean, it's not a problem, but it is a disadvantage.

[03:50] It's the number of trades. Even with 25 years worth of data, we have three trades per year. So that's 75 trades in the past 25 years. Now, this is not enough trades, but if you combine many instruments in a portfolio, then you can get a good number of trades.

[04:10] So here, if you just click and exit the daily seasonality here, this is the monthly and weekly seasonalities. So we can see clearly that in the past 25 years, Friday and Monday are up days, and

[04:27] Tuesday is down day, and Wednesday looks like neutral. And if I pick last 15 years, again, Friday and Monday stays the same, last 10 years,

[04:39] and last 5 years. Let's say you're building strategies on goal, you might add this as a filter. So if your strategy picks a short on Monday, then don't do it.

[04:51] Or if it picks a short on Friday, then don't do it. So you can use it not to trade, you can use it as a filter. Now I built an Excel sheet that takes all this data and does a lot of analysis on it

[05:04] to give us more granular data to see what's inside every day. So here I loaded the gold data and this is the heat map. So first of all, we can see that the activity time is between 9 and 12.

[05:21] This is Eastern Standard Time, but this is what I want to show you. So this is intraday per hour. So yes, Friday looks up, but not starting from the beginning. It's actually somewhere around between 4 and 5 o'clock.

[05:36] And also, the beginning of day Monday is up, but most of the other times are down. The only problem with this sheet is we don't have deflending it. So this is the goal, if you do the average, this is what I'm doing here.

[05:50] I'm getting the average of every hour, and this is what we're getting here, the average of every day. So if you deflend it, you can see the incisionality pops up really clear. The problem here in Excel, I don't have this deflending, so we need to do some testing.

[06:07] So this is the gold futures 5 minutes in TradeStation and the data I have here I put since January 1st 2007 And this is the strategy if market position is zero that means if we don have anything and day of the week is Friday this 5th Friday

[06:28] and time is greater than this input so 500 means 5 a.m. then we will buy next market and if we are long and day of the week is Monday and time is greater

[06:40] than 1 a.m. then we sell next bar at market so 1 a.m. is here I'm gonna only optimize this one of course you can optimize this one also so this is an example of a trade for this strategy so this

[06:53] is an optimization done from entering from 4 a.m. till 4 p.m. every hour and you can see the nice thing is they're all profitable of course we know this because I'm entering somewhere between this

[07:10] peak and this peak so anywhere you enter here we should be profitable but we need to test anyway and of course anytime you exit between sunday and early morning monday again you should be profitable

[07:24] which i tested it but i don't want to complicate things so i just want to show you one chart and you can see they're all profitable and by the way this price is he has 25 dollars for

[07:36] commission and slippage so and the minimum one we can see it's roughly around 80 dollars and of course 10 is being the best but of course if i want to trade this i will take something like seven o'clock and this is the strategy performance annually since 2007 we're making money every year

[07:56] except 2016. and if we go to the performance graph so here we have the stagnation between February 2016 till beginning till January of 2019. So that's almost two years and 10 months where we

[08:12] did nothing basically and we are just making new highs currently. And this is the drawdown extremely acceptable is under seven percent and of course we're trading six one contract per trade there is no stop loss no profit target and trade analysis like I mentioned where our

[08:29] Our average trade is $159, and this is including $25 for Pigeon Commission. There are 747 trades, and we are almost 58% one percentage.

[08:41] So that's the difference we want to get when we trade in per week. Because, of course, seasonalities do exist on monthly, especially for agriculture futures, like I mentioned.

[08:55] But still, I mean, I've checked many. I have also portfolio on stocks. trading seasonalities in the Discord server. But here when we trade intro week, of course, we will get much more trades.

[09:07] And that's what we're looking for because more trades makes the pattern significant. Now, this pattern is raw. There is no optimization on it, no filter on it because you can add like a monthly filter.

[09:21] You can add volatility filter direction filter RSI you name it There are you know at least hundreds of others I can add to this strategy But this is raw and that what I like about seasonality It on its

[09:35] raw basis, it's extremely profitable. So anything you do on top of it, it's just a nice thing on the case. Now like I showed you, there are other patterns in the gold, and for example, we can see

[09:47] that Monday also starts around 2, and here is the exit between 6am till 8pm. And again we can see all of them are profitable, this is after commission slippage, but of

[09:59] course for example this is around $25 which is very low, but we can see here if we exit around $8 that would be very good and we're making about $63, this is after commission

[10:12] slippage so that's very good. And this is the average rate $66, and again we have plus $750 trades and periodical returns, are losing the 21 losing the 2019 and 2016 so we have four years of losses with the short strategy

[10:29] the curve again is good when we combine it so now this is how it looks together so this is friday to monday and then after that we go short and we exit this is the annual return so of course you make

[10:44] less because now we lost some money in the short side on 2021 but now we have long and short and we are doing 1500 trades half and half both of them above 50 winning percent and the average trade

[10:59] goes down to 112 and the graph now we eliminate some of the stagnation now we have we go up in the middle drawdown now is more with the short side so now we are around 13 percent of course

[11:14] like i mentioned there is no profit target no stop loss no filter in this strategy which of course you can easily add to them. Like I promised, extremely simple seasonal strategy, you can add it to your portfolio. Of course, you should enhance it by catastrophic stop loss, profit targets,

[11:30] volatility filters, and so on and so forth. But really, every trader should have seasonal patterns in their portfolio because that diversifies your portfolio by style because other strategies depend

[11:44] and on some logic, this one is a fixed pattern, and it will add a huge diversification to your portfolio. Of course, if you have any questions, any comments, please do so below the video, and I'll be more than happy to answer you.

[11:57] And if you want to take this further and be a part of my inner circle, and receive the Stactical Asset Allocation Portfolio signals, the seasonal stock signals, alongside the live question answer sessions and many many free downloads then you are welcome to join

[12:15] the discord server through the paper link down below as always good luck with your trading good luck with your investing stay safe and i'll see you soon

[12:38] you