Hey: hey: hey! What's going on everyone, i'm matt, and today i want to talk about a trade that i completely fumbled and missed out on making over three thousand dollars. If you've been trading for any amount of time. I'm sure you've experienced the frustration of deciding to not take a trade for whatever reason, but then watching the stock do exactly what you thought it was going to in the first place. It's like you can practically feel the money falling right through your hands.

This has happened to me more than i would like to admit, but the most recent time was especially painful because it would have been a big winner. One of my seasonal trading strategies gave the signal to short gold. I thought i knew better, so i didn't take the trade it turns out. I didn't know better because i was wrong really wrong in this video.

I'm going to fully explain the seasonal trading strategy. I decided to not listen to all the entry and exit rules will be made crystal clear, so you can fact check me if you want to at the end of the video i'll explain why i pass on the trade and with the power of hindsight bias. I'll explain why it was a silly mistake if you're interested in this type of content hit the subscribe button and turn on your notifications. I put out new videos every week.

This seasonal strategy is a short trade and it runs on the gold futures market. I'm personally a fan of seasonal trades because they are relatively easy to build and verify which makes them excellent examples for new systematic traders. Like all the strategies i discuss, this one has a concrete set of entry and exit conditions. You would short gold when two things are true: first, it has to be the month of june and second, it has to be the fifth trading day of the month.

The short position would be taken right when the market opens on the fifth day. So it's important to be ready the day before your short position would be covered in one of three ways: whichever comes first, the first possible exit is a profitable close. Since you are shorting gold, you would need the price to fall in order to make a profit. If the daily closing price is below your entry price, as in your in profit, you would exit the next time the market opens.

The second possible exit is your stop loss. You would pull the proverbial rip cord at a loss of double the value of the average range over the past 20 days. This means that the magnitude of your max loss is defined by the recent volatility of the market. The third and final possible exit is a max hold time.

If you have the short position for six days and the first two exits haven't been triggered, you would cover the position the next time the market opens. That's the entire strategy. I know it may seem basic, because the rules are pretty simple, but it has pretty incredible performance over the past two decades. Let me show you exactly how it has performed in the past and i'll specifically highlight the most recent trade i wish i took but didn't on the screen.

Now are the historic performance results for this seasonal gold short strategy from 2002? Until now, since this strategy trades once every june, it has traded a total of 19 times of those 19 trades. 16 were winners, one was a loser and two were break. Even this means that the percent profitability was just over 84 based on a trading lot. Size of one futures contract, the gross profit, was just under 18 000 and the gross loss was 190.

This means that the profit factor ratio was 93.42, in other words, for every dollar lost over 93 was gained. Here is the equity curve for this trading strategy. As you can see from 2002 until now, it's been pretty much straight up, except for a small dip right here. The most recent trade number 19 was the one i decided to pass on, but, as you can see, it caused a nice bump in the equity curve.

In fact, let's take a more in-depth look at this particular trade. There are two conditions that must be met for this trading strategy to take a short position. The first condition is that it must be the month of june, and the second condition is that it must be the fifth trading day of the month. As you can see here.

This is the first trading day of june. Here is the second, the third, the fourth and the fifth, when the market opens on the fifth trading day is when you would establish the short position. The opening on this particular day was 1712. Now we have to consider the three possible exits.

The first profitable close the stop loss and a max hold time for this specific trade. The daily closing price was below the entry price on the first day, which triggers the first profitable, close exit. In other words, we would cover the position the next time the market opens. The next market open was at 1686.7, which also marks our exit price.

This difference of 34.1 represents a gain of 3 dollars because the gold futures market is highly levered. It also represents the profit i didn't make, because i thought i was smarter than the strategy which really stings. The reason why i chose to not take this trade was pretty simple. On the first friday of every month.

The unemployment numbers for the previous month are released. This year, that report and the entry for this strategy happen to coincide since the economy isn't doing the best right now i thought the announcement was going to be negative. In my mind, there was a good chance that the market would go down and gold would go up, which was an obvious contradiction to the seasonal strategy. My thesis was right.

If you consider the exact opposite happening to be right, the unemployment report beat expectations, so the market rallied and the price of gold fell. If you're curious, why this inverse correlation exists? There's a link to an explanation, video on the top of the screen now seeing how this trade played out. I obviously wish i would have listened to this strategy. I mean who wouldn't want an extra three thousand dollars to be fair, though, if gold had moved in the opposite direction for a fleeting moment, i would have felt like the smartest guy on this planet.

There's no such thing as a perfect trader. I know that you know that we all know that if that is your goal, you'll end up falling short regardless hindsight, bias can really mess with your head. For me, this is just example, 1000 of why discretionary trading is not my strong suit figure out what works for you and stick to it. If you want the code or any of the analytical reports for this strategy, let me know in the comments below you can also easily find me on twitter.

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