Otto runs six trading strategies. Each has its own markets, its own timeframe and its own entry and exit rules. They were chosen because they do not depend on the same market conditions, so the portfolio as a whole is steadier than any one strategy alone.
Two of the six were validated on historical data that had not been used in their development: the Index Dip-Buy and the FX Weekly Mean-Reversion. The remaining four are directional strategies in gold and the major indices. They performed well in testing and are included under the same stop loss and position-sizing rules, but we do not describe them as proven edges.
We make the distinction so that you know where the strongest evidence lies. The descriptions below explain how each strategy works. Exact parameter values are not published.
Stock indices tend to rise over the long term, and short, sharp pullbacks within an established uptrend tend to recover. This strategy buys those pullbacks, but only while the index is trading above its long-term trend. A filter excludes unusually large single-bar falls, so it does not buy into a genuine collapse.
Over the course of a week, a currency pair that has moved unusually far from its recent average, while the market is choppy rather than trending, tends to return towards that average. This strategy enters when the weekly close is stretched beyond a volatility band and a separate filter confirms the market is not in a strong trend.
When gold has been trading quietly in a range, a clean break out of that range tends to continue. This strategy enters on a break of a multi-week range, but only when a trend-strength filter confirms the market has been ranging, so it does not chase a move already under way.
When gold is in an established trend, this strategy trades breakouts in the direction of that trend. A moving-average filter defines the trend and blocks trades against it.
Strong intraday momentum that leaves a gap in price, an imbalance the market tends to keep moving away from, tends to continue. This strategy identifies strong, well-positioned hourly candles using a combined momentum and close-location reading, and enters in the direction of the move.
After a period in which the index has been directionless, a breakout that coincides with a sharp rise in volatility tends to run. This strategy enters on a short-term breakout only when the market has been directionless and volatility has climbed into its upper range at the same time.
The charts below show how each strategy performed over the backtest period, how closely their results moved together, and which strategies were profitable in each year.
All three publish here on completion of the backtest, each labelled as backtest, so you can see the strategies taking turns rather than moving as one.
Beyond the six above, further strategies are being tested on Otto's public demo accounts. They are switched off in the version of Otto you install and are not part of the product. Each has a pre-defined pass mark and a pre-defined point at which it will be withdrawn.
If a strategy passes, it will be added to Otto and described on this page, with the date its testing began and a link to its account on Karnek. If it fails, it will be removed, and we will say so. The current list publishes here as strategies clear the bar. No figures, no promises.
Before Otto was released, a large number of strategy configurations were tested across every market, timeframe and strategy type available to us, using the same historical data, the same costs and the same pass criteria. The large majority failed. Our findings for each type of strategy are published in the tested strategies library.
Each strategy's trades are recorded on Karnek, read-only from the broker, with the stop loss and target on every position.