Video summary

Is JJ Simons Strategy Profitable? I Backtested 365 Days With a Custom Indicator

Main summary

Key takeaways

Finance

Finance-specific summary

  • The video evaluates a trading approach attributed to JJ Simons (prop-firm trading).
  • Core claim: the “one candle” idea (the pre-NASDAQ-open candle) allegedly drives ~$1.3M in profits over 12 months for prop firms.
  • The method is based on the idea that the New York open causes an “unfair move” due to institutional volume, pushing price away from a “fair price.”

Fair price definition

  • Fair price = the price of the candle right before the NASDAQ open (the pre-open candle).

Market/timing concept

  • The strategy trades around the transition from New York open into NASDAQ open.
  • That window is treated as the period when the “unfair move” occurs.

Instruments / tickers mentioned

  • NASDAQ (specifically micro Nasdaq for the backtest)
  • No explicit stock tickers/ETFs/bonds/commodities/crypto were named in the subtitles.

Strategy mechanics (step-by-step framework, as implemented)

Reference line

  • “Pre-open price” is marked as an orange line (the fair price).

Trading window

  • A shaded period around the New York open is used, where the institutional “unfair move” is expected.

Two trade types from the same setup/line

  1. Continuation trade

    • Take momentum in the direction of the opening push away from the fair price.

  2. Reversion trade

    • After the push “exhausts,” trade back toward the fair price.

Discretion vs mechanical execution

  • The author states the coded rules match JJ’s described rules “as closely as possible,” but are not identical to a trader’s real-time discretion/eye.

Prop-firm risk / consistency logic (explicit)

  • Many prop firms include a consistency rule: no single trade can be more than about ~half of total profit.
  • JJ reportedly addresses this by:
    • Using maximum risk to clear the target in exactly two trades
    • Targeting two winners, each roughly half the profit goal

Probabilistic expectation (given ~50% win rate)

  • Two trades in a row = 1 in 4 (≈ 25%) chance to pass the funding framework (based on a simplified 50% win-rate assumption).

Backtest results & key performance metrics (author’s work)

Baseline (unoptimized / original logic coded)

  • Profit factor: ~1.2
  • Overall: profitable but modest
  • Interpretation: suggests an edge, but not strong/exciting.

Optimized version (micro Nasdaq, last 365 days)

  • Net result: +$48,700 on a $100K account
  • Return: 49% for the year
  • Profit factor: 1.7
  • Trades: 289
  • Win rate: 55%
  • Max drawdown: $3,600 (~2.5%)
  • Drawdown stayed within a prop drawdown limit of $4,000 (“goated 100k $4,000 limit”).

Same method on Nasdaq cash (described as stronger)

  • Profit factor: near 1.9
  • Other exact statistics were not provided in the subtitles.

Optimization choices mentioned (examples of rule tweaks)

The author reports testing many combinations and highlights examples such as:

  • Continuations only in the direction of the opening candle
  • Reversion limit: only one reversion per session in the first 35 minutes
  • Continuation timing: taken after the first candle
  • Minor adjustments to take profit and stop levels (“nudged the take profit and stop”)

Explicit recommendations / cautions

  • Not magic / regime dependent: good performance is not guaranteed.
  • Settings are optimized for the last 12 months; results may differ in other market regimes.
  • Proper use suggestion:
    • Load the indicator first,
    • Observe behavior on your own charts,
    • Then tweak settings for different market conditions.
  • Historical backtest warning / compliance:
    • “Historical back test. Past results and simulated results do not predict the future.”
    • “None of this is financial advice.”
    • “Test on your own data before you risk real funds.”

Disclosures / disclaimers

  • No financial advice
  • Past/simulated results don’t predict future outcomes
  • Encourages testing on your own data before risking real capital

Presenters / sources

  • Presenter/author: the video narrator who runs mechanical backtests and creates the indicator and strategy (name not stated in the subtitles).
  • Referenced source/trader: JJ Simons, credited as the origin of the described trading approach.

Original video