Strategy backtest pt.10 - copper trading strategy

In my last last portfolio review I was quite optimistic about being on the right path with my copper trading strategy. Just one week later the strategy revealed its weakness again by creating two lossy trades that ruined all profits gathered before. The overall result after 10 weeks of applying the strategy was thus disappointing:

• without trading mistakes: +2,33% 
• actually realized in my portfolio: -9,33% 

The following chart shows the performance in the course of time. The red line shows the "theoretical" development of my equity without trading mistakes. The blue line shows the actual development including the trading mistakes:

Due to these results I stopped applying the strategy but didn't want to give up that quickly. Instead I adjusted my backtesting tool, so that I can backtest this kind of trading system. My main focus was on finding better and fixed entry signals rather than relying on my chart analysis skills.

copper trading strategy

Since I started trading on eToro I have been looking for a fixed trading strategy, that I could apply "without thinking". While studying my copper trades, I realized, that on many days the daily copper candlesticks show long upper and lower shadow. So I figured it could be profitable to trade an a daily basis. In this post I describe the strategy and present first results.

Portfolio chart analysis 22.12.2016

Markets have been surprising in the last weeks. Not only did I make some bad trade decisions, no, all traders I copy right now on eToro are between 5 and 30% in red. So I am not the only one who got surprised and messed up. Anyhow, now I am here, two days before Christmas wondering what to do with those unfortunate trades:

Sell $Ger30: -33% and -38%
$Copper: Sell +23%, Buy -34%
Sell $DJ30: -11%
Buy $Gold: -21%

I am especially worried about the $Copper and $Ger30 trades so I tried myself analyzing the charts of those assets. The target is making decisions whether to hold or close those trades or to tighten the stop loss limits. As usual I like to share and discuss my thoughts with you in this post.

Chart analysis on copper 02.10.2016

After my last analysis I forecast a slight downtrend on Monday morning followed by an uptrend towards the end of the week. That was exactly what happend (see post on my last analysis here). Only problem: I didn't trust in my own findings and did not invest accordingly. Total gain depending on exact opening and closing price would have been between 1-4% with a leverage of 1. Now I wanted to give it another try and investigated the 4h-based and the 1d-based charts with different indicators.

Chart analysis on copper pt.2

In my last post on copper I described the situation with my open trades. As you can see in my eToro portfolio history and news feed I managed to close both trades with a small profit. After gaining confidence on my chart analysis skills I opened a sell trade with leverage of ten on September 13th. 3 days later I lost 31,5% (trade is till open)! Time to analyze...

How I choose my time basis for chart analysis

When I first tried to analyze a stock chart I wondered which time basis I should choose. Many traders  on eToro give some information about their personal attitude and I am looking forward to get more detailed insights from @Trex8u247 soon. While waiting I studied charts and thought about what they are trying to tell me about the market-trend. Here is my theory based on my experience so far:

Chart analysis on copper pt. 1

My first investment in commodities was copper. I figured there is a buying signal in the chart so I opened a trade with a leverage of 5. The next morning I already saw a selling indicator on the chart: There was a plateau starting on the upper Bollinger-band.