Strategies - Todays choice and the History
Midnight Rider - Strategy trading MNQ overnights (0000-0600 -5UTC)
The History
I’ve been trading a particular strategy for seven months now. It’s a strategy derived from a template published by DTB Traders using the Baseline Wick Strategy. I started around April 15th, getting serious about Algorithmic Trading and relying less on Discretionary Trading.
A podcast I listen to has been the impetus for this article. Line Your Own Pockets by Dave Mabe and Michael Nauss. It’s a podcast you should follow if you are a trader wanting to grow. They are in the middle (or beginning, it’s a broad subject) of some good information on strategy building. Although much of what they review doesn’t apply to me, I still gain valuable insights from every session. I listen to many podcasts; this is the one I make a point to catch every session within an hour of being published. I watch for it every Monday.
So, this strategy I’ve been running, Midnight Rider, is a trading strategy designed for traders with small accounts or those trading prop firm accounts for futures contracts. It trades the MNQ. It’s been successful, maturing each month as I try different approaches with the settings. It took a jump after I listened to the podcast I mentioned above and adjusted my approach to the strategy based on the podcast discussions. The change was solving for the maximum number of trades I could get before tuning for results. Previously, I was solving for Maximum Percent Profitable without considering the number of trades that occurred during the lookback period. This one change opened a whole new world of results.
It’s been a bit of trial and error and learning on my part. With the above, you can see the growth of the strategy. In July, I began focusing on maximizing the number of trades, prioritizing small ones. In August and September, I wanted to boost the profitability of each trade by adjusting the Target Profit and expanding the Stop to allow for a larger profit per trade. The percentage of profitable trades suffered with this approach.
In October, I went back to the basics, returning to small trades, trying to grab as many as possible. I worked diligently to reduce the Stop Loss on the trades. I also worked to reduce the maximum daily loss and broaden the maximum daily profit. The strategy has only run for three days in October, making the month look promising. Remember, this is MNQ. Those aren’t bad numbers.
The Choices
This brings me to this week’s strategy optimizations and backtests. I have twenty choices and have narrowed it to two. All of my choices are pretty close.
The differencce in Total Net profit is negligible across the backtest period. The number of trades is close, with a difference of sixteen trades. But check out the Profit Factor. I consider this significant, a factor difference of almost 9. (I’m impressed I got past two total.)
Looking at this alone, it’s easy to say the second choice (line 2) is the easy pick. Let’s dive a little deeper.
The strategy summaries for each are pretty similar. I take note of the time to recover if the trades fail. One day versus three days is a tough call. The winning and losing trades are worth comparing.
The equity curves are great. Any better, and I would accuse myself of curve fitting. There aren’t many differences here. Both curves head in the proper direction.
Here is where the rubber meets the road, all coming down to a personal choice—the daily net results. What’s the song say, ‘Do you see what I see”? One of these trades every day, the other does not.
We have two strategies that trade four days a week. One option offers a higher return, while the other is slightly safer, boasting a higher profit factor and a higher percentage of profitability. Which do you choose?
Given that all the results are so close, I’m opting for the strategy that trades every day. I would rather trade every day and and add a small amount of risk than to wake up in the morning to find nothing happened overnight. This is what I will be publishing for others to use. Sometimes it’s not the numbers, but a personal choice.
Coming soon
Midnight Marauder – as a companion to Midnight Rider, evoking a bolder, more aggressive revolutionary spirit for the NQ.
You can find me here:
on X (formerly Twitter)
on the web at Appalachian Equities (not updated enough)
on YouTube at Appalachian Equities
and here on Substack B W Tharp - Appalachian Equities
VENDORS I USE:
DTB Traders - This level of strategy building is unparalleled.
Find them here:
on the web at DTBTraders
their Discord Server at DTB Discord
on YouTube at DTB Traders
Affordable Indicators - my Copy Trader and Chart Trader
Find them here:
on the web at Affordable Indicators
their Discord Server at Affordable Indicators Discord
on YouTube at Affordable Indicators
I would love to hear more about the logic of the systems entry. Sweet name for the system?