What's going on everyone, i'm matt and boy, do i have a good one for you today and no it's not just because i finally got a haircut in this video. I will be covering a second seasonal trading strategy for the month of july. This strategy is specific to the energy sector and has a pretty impressive track record. As always, i will be sharing the exact details of this upcoming trade, so you can watch it play out in real time.

Don't forget to hit the like button and subscribe to the channel. If you ever need clarification about a strategy, i share feel free to reach out i'm more than happy to help. If you missed the video where i discussed the first seasonal trade of july. There's a link in the description below all of these videos are released before the trade takes place so make sure you have your notifications turned on.

You wouldn't want to miss any of the action. As always, please do your own research, i'm not a financial advisor or a fortune teller. I find statistically back trading strategies and share them with you, there's no guarantee of their future performance. Already then, as i said before, this seasonal trade deals with the energy sector, specifically oil.

This strategy is a short play, which means it's looking to profit off of seasonal weakness. To start, you should know how oil typically moves in the month of july. This could be figured out by simulating what would happen if you bought this commodity on the first day of july and then sold the position when the market closes on the last day of the month, and would you look at that? I have those numbers right here. These results are for the past 18 years.

Nine of the trades were profitable and nine were not perfectly split. The profit factor was 0.72, which means the losses outweighed the gains and tells me that the oil market slightly favors the bears in the month of july. Now that you understand why this strategy is shorting oil in july, let's go over the specifics. This strategy is no different than any of the others i've covered.

It has a set of entry and exit rules that dictate the entire trade. No discretion is needed. There is only one entry trigger for this strategy. If it's the 16th full trading day of july, you would short oil on the next market open for 2020, the 16th trading day of july falls on the 23rd.

This means you would short oil when the futures market reopens on the evening of july 23rd. Once you have established a short position, it would be closed in one of two ways. The first possible exit is a profitable close if the daily closing price is below your entry price, as in the trades in profit, you would exit at the next market open. The second possible exit is your stop loss.

This stop loss is based on the average range of the past 20 daily bars. If oil moves above your entry price by a value of double the average range, you would close a position for a loss. I know this isn't ideal, but it's better than taking a massive hit and that there folks is the july oil strategy. You would short oil when the market opens on the 17th trading day of july, then you would exit the position after the first profitable, close or when your stop-loss gets hit.

Whichever comes first now, it's time for the proof portion of this video, i'm not some crazy person who randomly decided on this set of entry and exit rules. I back-tested as many aspects as i could think of, and this particular combination of rules produced the most robust strategy. Let me show you what i'm talking about on the screen. Now are the historic performance results for this oil shorting strategy, but before we dive into that, let's take a look at its most recent trade from the year 2019..

The 23rd was the 16th trading day of july last year, which means a short position was taken when the market opened on the 24th. The opening value was 63.97, then, because the closing value was lower, the position was exited at the next open, which was 62.64 cents. This difference of 1.33 was a gain of 1 30 because the futures market for oil is leveraged by a factor of 1 000.. We know the most recent trade was his success, but let's take a look at how this strategy has fared over the past 18 years, because this seasonal strategy only trades once a year there was a total of 18 trades, 16 of the trades were profitable.

Two were not, which means the accuracy was just under 89, when looking at the monetary value of these 18 trades, the gross profit was 19.5 thousand dollars and the gross loss was two hundred ninety dollars. This created a profit factor ratio just over 67. In other words, the gross profit was 67 times larger than the gross loss. The average winning trade was 1.2 thousand dollars and the average losing trade was 145.

The average time in both winning trades and losing trades was just around three days. I thought this was important to point out, because this trade does not have a max hold time exit. I didn't want you to be concerned that on average you would be stuck in this trade for a long time. Finally, here's a look at the equity curve in the early 2000s.

This strategy was okay, but from 2006 onward it started to really perform. Let's hope it can make a new equity high in the year 2020.. I don't know how this trade will play out this year, but i know the odds are on my side in trading there's a saying that goes, history doesn't repeat itself, but it often rhymes. I personally believe this saying has merit, and i think it's perfectly showcased by seasonal traits, if you want the code or any of the analytical reports for this strategy, feel free to reach out to me.

You can find me on twitter, which is also where i post much more common updates for these strategies, if you're interested in supporting this channel, the best thing you could do is share this video with a friend hit the like button. Leave a comment subscribe to the channel. All the engagement helps with getting this video in front of more people. Thanks for watching best of luck in the markets, you.

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