Hey everyone, i'm matt, and i'm here, to give you guys another trading strategy. This particular strategy is meant to be run on the technology etf qq and has an excellent profit factor of three. This means that its gross profit is three times larger than its gross loss. In other words, this strategy makes you three dollars for every dollar that it loses.

I won't be holding anything back by the end of this video. You will know every detail of the strategy and exactly how i made it. I enjoyed trading the qs because this etf tracks, the nasdaq 100. The nasdaq 100 is currently one of the most popular stock market indices, it's so popular because it's composed of information technology companies such as apple, facebook, netflix and tesla.

My background is intec, so i specifically enjoy paying attention to what's happening with the nasdaq. It also happens to be a small bonus that the technology sector is one of the best performing in recent history. If you like trading in the tech sector, or i guess using profitable trading strategies in general, i think you will really like this momentum q strategy, but before i dive into that, you should know that i'm a dorky computer nerd, not a suave finance guy. I am not professionally trained to tell you what you should do with your money.

It's your money and your decisions, i'm simply sharing a trading strategy that has made me money. It's no secret that trading strategies can be extremely complex, but there are still many good ones that are rather simple. Those are the ones i like to focus on and share with you. My goal is to show you that creating a profitable strategy is something anyone can do not just people gifted with math skills.

If you enjoy learning about strategies you can use hit, the like button leave a comment subscribe to my channel. It really helps with the youtube algorithm and is truly appreciated by me. Let's dive into it, all good trading strategies have a set of entry and exit rules. The entire point is to have a specific plan that does not involve personal judgment.

The momentum-based strategy, i'm sharing today, has two entry rules and three possible exits. The first entry rule for this strategy is that the current momentum has to be less than the momentum of two days ago. In trading. Momentum is defined as the current price minus the closing price of an earlier trading bar.

This particular strategy calculates momentum by using the closing price of 10 days prior most trading platforms have this indicator built in, but it's not too difficult to calculate by hand. If need be, the second entry rule deals with range range is the difference between the high and the low of a trading bar for this strategy to go long. The range value must be less than the range readings of the past 6 days. This means that you need the current range to be relatively small.

If these two entry parameters are true, when the market closes for the day, you would buy qqq when the market opens the next morning. Now you might be wondering when you should sell the position. There are three possible exits. The first exit option is when the market closes and the closing price is above your entry price.

You would sell when the market opens the next day. The second option is your protection. It's your stop loss. The stop loss would be placed at a decline of double the average range value over the past 20 days.

The third and final exit is a max hold time if 10 days pass and there's been no profitable, close or decline great enough to hit the stop loss. You would sell when the market opens on the 11th day. That's the entire strategy. You buy the cues when the current momentum is less than the momentum of two days ago, and the range is the smallest.

It's been in the past six days, then you sell the position after a profitable close after your stop, loss is hit or after 10 days pass. Whichever comes first now, since you know not to trust strangers on the internet, you should be wondering where the proof is to prove i'm not making false claims. Let's take a look at the strategy's historical performance. I can't guarantee what it will do in the future, but i can show you what it's done in the past on the screen.

Now are the historical performance results for this qqq strategy, as you can see, it actually trades somewhat regularly. Over the past 20 years, it's traded 313 times. This means that it trades roughly 15 times a year. Interestingly enough, at the time i'm recording this video.

It took a long position on the qs this morning. It looks like it bought in at 2, 29, 48 and after all, the action today, it looks like it will be able to exit tomorrow morning when the market opens for a profit. So, like i said over the past 20 years, it's traded 313 times and out of all of those trades, just over 80 percent of those were profitable. Also, the profit factor was just under three.

This means that for every dollar lost over three was gained. I don't want you to get bogged down in the magnitude of the numbers, such as total net profit, gross profit gross loss. Simply because these results are based on using the strategy with a hundred shares of qqq, you could choose to buy more or buy less. You could use a leveraged etf, such as tqqq.

You could use options, you could use nq on the futures market. Really. You could choose to amplify this strategy. However, you want.

This makes the profit factor and the percent profitability the most important numbers, because you could choose to multiply this by whatever value you want. Finally, let's take a look at the equity curve for this strategy. Since the year 2000, it's been pretty much straight up. It took a small dip at the end of 2018, but it quickly recovered and has since been returning to new highs.

This strategy didn't magically come to me. I used to program strategies, but it was pretty time consuming and, if i'm being honest kind of hard, i created this strategy with a program called build alpha build alpha requires absolutely no coding and makes strategy creation as simple as hitting a few buttons there's quite a Bit to it, so i won't be able to show you everything, but i can do a quick run through to show you how easy it was to make this strategy. Okay, let me show you how easy it is to make this qqq strategy on build alpha. First, we know it's a long strategy and we know the asset we are trading is qqq, which is right here all right now, it's time to set the entry parameters, the first one was a range restriction.

We know that we want it to be the smallest over the past six days and then the other entry parameter was based on momentum. We want the current momentum to be less than the momentum from two days ago, and our momentum window length is ten days we're. Comparing the current day to two days prior, so those are all of our entry parameters now time for the exit parameters. We know the stop.

Loss is two times the average true range. Our max holding time is 10 days and we are looking for one profitable. Close. That's it that's the whole strategy here.

The in-sample results out of sample results and all results here are the entry parameters. Here are the exit parameters, the net p l draw down p, l the draw down ratio, total trades win percentage. The list goes on all right. Let's take a look at the equity curve.

Here's the equity curve. You shouldn't be that surprised. It's the same curve. We saw on my trading platform, it's gone up.

It took a small dip at the end of 2018 and since then has continued to go up. There is one really cool thing i want to show you and it's right here in robustness, testing testing seems to be a very powerful analytical tool, but for the point of this video i wanted to specifically speak about seasonality, so right now that i have it selected, It actually splits my strategy up on odd versus even days as you can tell this particular strategy performs better on even days for whatever reason you can look at other metrics as well, such as day of the week week number month. These analytics give insights to where your strategy is performing well and maybe not so well, which gives you the opportunity to make seasonality-based improvements, if need be. If you want the code or anything else related to this strategy, reach out to me in the comments below, if you enjoyed this video hit, the like button consider subscribing if you're interested in this type of content, i put out new videos every week, thanks for watching And best of luck with your trades, hey, do you think a middle schooler is going to make fun of me for being a nerd.