Deja Vu

Gold is a precious metal of significant historical and economic value. Traditionally, it has played a crucial role in finance and the economy, being used as currency and in the minting of valuable coins due to its rarity and beauty. Nowadays, although no longer used as everyday currency, gold remains an important store of value and investment medium. Countries accumulate it as part of their international monetary reserves, and investors seek it out, especially in times of economic uncertainty or stock market instability, for its reputation as a "safe haven." This means that gold tends to maintain or increase its value during financial crises.

To invest in gold, buyers can acquire bullion, which are gold bars certified by recognized entities such as the London Bullion Market. The value of these bullion bars is based on the weight of gold and market conditions at the time of purchase.

The history of gold is long and varied, with the adoption of the gold standard in 1819 being a notable highlight. This monetary system linked the value of a country's currency to its gold reserves, facilitating international trade through currency exchange based on a fixed gold value. Although the gold standard provided stability for many years, its use declined after World War I, when belligerent countries, in need of more financial resources, began to excessively print money, thus disconnecting from gold.

In the modern era, although precious metals like gold no longer dominate the monetary system, they remain valuable components of the global economy. However, the rise of digital technologies and cryptocurrencies presents new challenges and opportunities for the gold market, maintaining its relevance as a secure investment asset in a rapidly evolving world.

Introduction to the Gold Futures (GC)

Gold Futures (GC), traded on the CME Group's COMEX division, stand as a pivotal financial instrument for investors and traders looking to hedge against economic uncertainty or speculate on the price movements of one of the world's oldest and most trusted assets. Each contract is denominated in U.S. dollars (USD) and represents 100 troy ounces of gold, with a price fluctuation of $0.10 per troy ounce. This article aims to detail the foundational aspects, advantages, and strategic considerations essential for effectively navigating the Gold Futures market.

Foundational Aspects of Gold Futures

Gold Futures contracts enable market participants to take a position on the future price of gold without the immediate need to physically hold the metal. The contract size is set at 100 troy ounces, making it a substantial investment in gold's market value, and is standardized for ease of trading and liquidity.

Trading on the COMEX division of the CME Group ensures that Gold Futures benefit from high liquidity, extensive market participation, and a transparent trading environment. This is crucial for both speculative traders and those looking to hedge their portfolios against inflation or currency devaluation.

The contracts are cash-settled, meaning that no physical delivery of gold occurs at settlement. Instead, traders settle their positions in cash, based on the gold price movements between the contract's opening and closing.

Advantages of Trading Gold Futures

Hedging Against Inflation

Gold is traditionally viewed as a hedge against inflation and currency risk. By trading Gold Futures, investors can protect their portfolios against the depreciation of fiat currencies and the erosion of purchasing power.

Speculative Opportunities

The gold market is influenced by a range of factors, including geopolitical events, currency fluctuations, and changes in demand for jewelry and industrial uses. This volatility offers traders opportunities to speculate on price movements for potential profit.

Liquidity

Gold Futures traded on the COMEX are highly liquid, facilitating efficient entry and exit from positions. This liquidity is advantageous for managing trades and capitalizing on market movements swiftly.

Leverage

Gold Futures trading allows for leverage, meaning traders can control a large contract value with a relatively small amount of capital. While this can amplify profits, it also increases risk, necessitating careful risk management strategies.

Deja vu Gold Trading Sytem

In the competitive world of commodities trading, automated strategies have become indispensable tools for executing trades efficiently using algorithms. One such notable strategy is the "DejaVu" strategy, tailored specifically for trading commodities. Developed by Liderbot, this strategy is designed to capitalize on market opportunities, providing traders with a systematic approach to navigate the complexities of commodity markets.

Costs of DejaVu Algorithmic Trading

The "DejaVu" strategy is an innovative solution for traders aiming to diversify their portfolios through advanced algorithmic trading software. Renting the license for this strategy costs $55 per month, making it accessible for traders looking to leverage the potential of algorithmic trading in the commodities market.

Historical Results of DejaVu

An in-depth analysis reveals that the "DejaVu" strategy has undergone scrutiny in 3078 trading sessions. With a winning rate of 54.6%, it demonstrates its proficiency in navigating the commodities market. The strategy has accumulated a total profit of $304,493, showcasing its potential to yield profitable outcomes through algorithmic trading. However, it's essential to note that it also experienced a worst drawdown of ($21,398) on 11/13/2020.

Ability to Beat the Market Trading with DejaVu

Despite occasional drawdowns, the performance of the DejaVu strategy substantiates its capability to deliver substantial returns to investors. Since its inception, it has achieved an annual ROI of +28.6%, making it an attractive option for investors across different investment capacities.

Performance Metrics in DejaVu Algo Trading Strategy

The DejaVu strategy exhibits commendable performance metrics, including a profit factor of 1.31, indicating its profitability. With an average winning session of $1,013.69 and positive Sharpe and Sortino ratios of 1.0868 and 1.8134 respectively, the strategy effectively balances risk and reward. Additionally, the percentage of time with an open position is 75.7%, suggesting active trading activity.

The DejaVu strategy represents the potential of automated trading in the commodities market. However, it's important to remember that past performance metrics serve as a guide and do not guarantee future returns. Investors should exercise caution and conduct thorough research before implementing any trading strategy.

Here are the detailed statistics for the DejaVu strategy:

• Analyzed Sessions: 3078

• Winning Sessions: 54.6%

• Worst Drawdown: ($21,398) (11/13/2020)

• Total Profit/Loss: $304,493

• Current Run-up since DD low: $160,541

• Current Drawdown: ($4,553) (12/13/2023)

• Annual ROI: +28.6%

• Best Session: $8,230 (06/20/2013)

• Worst Session: ($8,920) (11/09/2020)

• Profit Factor: 1.31

• Winning Session Average: $1,013.69

• Losing Session Average: ($930.18)

• Commission per side: $12.50

• Percentage Time with Open Position: 75.7%

• Slippage per side: -0.1209 ($12.09)

• TM Rating: 2 2/3

• Sharpe / Sortino Ratios: 1.0868 / 1.8134

• Sterling / MAR Ratios: 1.4436 / 0.5586

In previous posts, we've discussed a system for natural gas and for Crude Oil. Below, we display the images. What would happen if we combine the 3 strategies into one?

Algorithmic trading Software Porfolio

Let's create an algorithmic portfolio with the intraday Crude Oil Hs. the swing strategy Jose Gas natural. and the swing strategy for gold, Deja vu

Equity Curve and Drawdown: 2017 to 03-08-2024

Trading Systems Portfolio: Jose Gas Natural & Crude Oil HS & Deja Vu

Generated with Lider Insights since 2017

The combination of the portfolio from the aforementioned three strategies has resulted in a net outcome of $296,126 from 2017 until today, March 8, 2024, with a maximum drawdown of $20,275. This net result accounts for contract execution fees, monthly rental fees for the strategies, and slippage. It's important to remember that past returns do not guarantee future results, and the worst streak of a system or portfolio is not the worst it has experienced but the one that may occur next. Welcome to the future of investments. This is an example of an Algorithmic Trading Software Portfolio for financial futures, available through iSystems on major global financial futures brokers

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