Video summary

Watch Me Backtest My $1,500,000 Trading Strategy

Main summary

Key takeaways

Finance

Finance-Focused Summary (May Backtest: Continuation/Reversion Strategy)

Core strategy & trading window

  • Backtests continuation and reversion setups for May (trade-by-trade emphasis on May days).
  • The strategy changes slightly month-to-month depending on the market regime:
    • Drifting to all-time highs
    • Dumping/correcting
    • Stagnating
  • Execution style:
    • Avoids 8:30 a.m. news trades (the interface can’t view needed live values); focuses on market opens for New York AM trades.
    • Stops trading around 11:00 a.m. (“I’m done for the day at 11.” repeated).

Instruments / tickers

  • Explicitly mentions trading NQ (Nasdaq futures).
  • No other tickers/ETFs/bonds/commodities are named.

Risk management / position sizing (explicit rules)

  • Fixed reward/risk in the backtest framework:
    • Stop loss: 500 points
    • Take profit: 750 points
    • Often summarized as: “risk 500, go for 750 every single trade.”
  • Sometimes uses 0.5 contracts (or half size) depending on candle size and distance to “fair price.”
  • Optimization noted:
    • Contract size can be adjusted based on points to fair price to improve win rate.
  • Prop-firm constraint commentary:
    • Mentions “consistency rule” and drawdown limits.
    • States: don’t go for more than 1500 on eBunded, and that funded vs prop rules differ.
  • Operational notes:
    • “On to the next day” after 11 a.m.
    • Backtest results differ from live due to mechanics (e.g., fills/P&L and drift assumptions).

“Fair price” concept & dynamic update

  • Initial fair price: set as the pre-open price.
  • Intraday updates: fair price is adjusted when price moves away and then consolidates.
    • Example: after a volume spike where price continued up instead of returning to fair price.
  • Used as the mean reversion target.

Methodology / step-by-step framework (as described)

  1. Identify market context / regime
    • Focus on whether price is near all-time highs.
  2. Determine initial fair price
    • Usually the pre-open price; can shift to the most recent consolidation area.
  3. Choose between continuation vs reversion
    • Continuation trades: often when opening candle direction is favorable (e.g., open green → continuation long; open red → continuation short).
    • Reversion trades: after marking fair price, wait for price action to confirm an entry condition.
  4. Entry trigger
    • Frequently uses “break of structure” confirmation.
    • Sometimes emphasizes “no wick” / cleaner displacement.
  5. Set risk parameters
    • Typically -500 stop / +750 take.
    • Sometimes uses half size (0.5) to align with payoff/prop constraints.
  6. Time-based cutoff
    • Stops initiating trades after about 11 a.m.
  7. Adjust fair price intraday
    • If consolidation forms elsewhere, targets/fair price are updated accordingly.

News / tweet / “news drift” behavior (macro/flows framing)

  • Mentions trading around scheduled news but generally avoids 8:30 a.m. due to missing data.
  • Notes sudden volume spikes consistent with “Trump tweet”-driven moves (referenced multiple times).
  • Describes a “news drift trade” concept:
    • Enter after a tweet-driven move and allow price to drift in the same direction as the news.
    • Uses very large take profit / stop loss and “just ride the green.”
    • Notes prop/time exits (forced exit around 4 p.m. for prop requirements).
  • Implied caution:
    • Backtest/live differences and risky assumptions tied to news drift and fair price treatment.

Key explicit numbers / performance metrics

  • Repeated trade example parameters:
    • Stop: 500
    • Take profit: 750
  • May backtest (strategy-level stats):
    • 67% win rate
    • 56 trades, 37 wins
    • Average P&L assumptions:
      • Average win approximated as 750
      • Average loss approximated as 500 (consistent with fixed R:R)
  • Performance/drawdown:
    • Strategy optimized for reduced drawdown
    • For a $50k account, drawdown to “lose the account” is $2,000 (4%)
    • Claim: never hit -4% during the month
    • Mentions worst drawdown streak math (e.g., “instant $2,000 draw down streak” not reached)
    • References “back-to-back days” nuance
  • Mentions expectancy and profit factor (no exact numeric values shown beyond qualitative statements).
  • Equity curve described as linear / “everything as expected.”
  • “Performance calendar” note:
    • Six red days, but averages out due to many trades.

Explicit recommendations / cautions

  • Don’t short all-time highs blindly
    • Repeatedly says all-time-high shorts are “never the best.”
    • Prefers waiting for structure break confirmation.
  • Fair price must be updated
    • If price consolidates elsewhere (e.g., after volume spikes), update targets/fair price.
  • Risk management is central for prop firms
    • Emphasizes low max drawdown and a consistency rule to prevent account blow-ups.
  • Backtest ≠ live
    • Results aren’t totally accurate vs live due to execution and P&L mechanics.
  • Trade size optimization is allowed
    • Adjust contracts based on distance to fair price to potentially increase win rate.

Disclosures / disclaimers

  • No explicit “not financial advice” wording appears in the provided subtitles.
  • He states that:
    • Backtesting results differ from live/proper P&L and are “not totally accurate.”
    • Live/funded account constraints differ from prop firm rules.

Presenters / Sources

  • Presenter/source: The video speaker (name not provided in subtitles).
  • References using “FX Replay” for charts/news context.

Original video