​60-day holding rule: How to achieve market profits in Aberration strategy

Recently, our frequent discussions have focused on short-term trading strategies and techniques. Today, let’s change our perspective and talk about medium and long-term trading strategies. Medium and long-term trading usually requires traders to have sufficient patience and strict risk control management capabilities in order to win benefits in a changing market. Trends are still the focus of analysis in medium and long-term trading, and the Aberration strategy is a good trend-tracking strategy!

Aberration strategy flexibly operates between eight varieties including cereals, meat, metals, energy, foreign exchange, stock index futures, etc., and makes profits by tracking trends in the long term.

It is unique in that it can operate simultaneously in multiple low-correlation markets, and only needs to capture the high returns brought by the trend in one to several markets can effectively hedge potential losses in other unstable markets. The trading frequency of this strategy is moderate, with about 3 to 4 transactions per year for a certain product, with a position time accounting for as high as 60%, and the average position period for each transaction is 60 days.

Aberration strategy principle

1. Aberration strategy is essentially a channel breakthrough system based on volatility settings. Its core is composed of three channel lines: the middle rail is the moving average line (AveMa) of a specific period, and the upper and lower rails add and subtract a certain price standard deviation (StdValue) on the basis of the middle rail. This structure is similar to a Bollinger band.

The specific calculation process is as follows:

1. Calculate the middle track: AveMa=Average(Close[1],Length);

2. Computing standard deviation: StdValue=StandardDev(Close[1],Length);

3. Calculate the upper track: UpperBand=Avema+StdDevUpStdValue; (StdDevUp is the upper track parameter)

4. Calculate the lower track: LowerBand=Avema-StdDevDnStdValue; (StdDevDn is the lower track parameter)

Trading signal settings:

Feng entry: When the closing price breaks through the upper track, the long opening position is executed; once the price falls below the middle track, the exit is exit.

Short entry: When the closing price falls below the lower track, short opening will be executed; once the price breaks through the middle track, exit.

In short, the Aberration strategy uses a channel built by moving averages and standard deviations to capture the trend in real time. When the trend momentum weakens, the middle track tends to flatten first, and the K-line crosses the middle track in reverse, it is considered to be a trend end signal, and take profit or stop loss in time.

It is worth noting that the Aberration strategy has good product and cycle adaptability and is suitable for most trading products, but it is accompanied by a large drawdown risk. Therefore, strict fund management and risk control are an indispensable part of implementing this strategy. In addition, the Aberration strategy encourages combination operations, but traders still need to make flexibly based on actual market conditions when applying them.