Larry Connors’ Double Seven Strategy (Does It Still Work?)
Larry Connors and Cesar Alvarez revealed a system called Double Seven in their book Short Term Trading Strategies That Work. This is a fairly simple system that at the time
Continue readingHow To Create A Mean Reversion Strategy (Pros And Cons Of Mean Reversion)
How do you create or build a mean reversion strategy? This article gives you some input and advice on how to develop a mean-reverting strategy and discusses its pros and
Continue readingTrend Following Strategy In Gold (Moving Average)
Gold is different than stocks: it has no particular use and doesn’t provide any cashflows. If you own stocks, you own something that is producing value. Gold doesn’t produce many
Continue readingAverage True Range Trading Strategy (ATR Indicator)
The Average True Range (ATR) was developed by Welles Wilder in the 1970s. In his famous book called New Concepts in Technical Trading Systems, published in 1978, Wilder also published
Continue readingThe Anatomy Of A Bear Market: 2000 -2003 (S&P 500 and Nasdaq 100)
A bear market is when the price of a financial asset drops in value, normally over an extended period of time. But asset prices go up and down daily, so
Continue readingConclusions About Trend-Following The S&P 500
We recently came across an article called Breaking into the Blackbox: Trend Following, Stop Losses, and the Frequency of Trading: The Case of the S&P 500. It’s written by academics,
Continue readingA Simple Trend Following System In The S&P 500 (By Meb Faber)
Back in 2012 Meb Faber published a paper called A Quantitative Approach To Tactical Asset Allocation in the Journal of Wealth Management. The article looks at the following simple trend
Continue readingStock And Sector Rotation – What Is It – Why Do It
Business cycles make different sectors of the stock market perform differently from each other. For example, presumably cyclical stocks and banks tend to move first after a recession (we have
Continue readingWhy Trading Needs To Be Simple And Easy
The two researchers hypothesized that there might be a psychological explanation: when faced with a problem, people tend to select solutions that involve adding new elements rather than taking existing
Continue readingThe Chaikin Oscillator – Does It Work?
The Chaikin Oscillator was developed by Marc Chaikin in the 1980s. It’s not widely used nor well-known, perhaps for good reasons (we didn’t manage to see much benefits in any
Continue readingHow To Choose The Best Stock Broker For You
If you are serious about trading you must spend considerable time selecting the right broker. It’s an important decision, not only because of costs, but also because of the security
Continue readingHow To Enter And Exit Positions At The Close
One of the most important aspects of trading is the buy and exit prices. How do you enter and exit a trade? We all know commissions can eat into the
Continue readingSurvivorship Bias In Backtesting, Trading And Investing (Examples)
Almost all traders ignore survivorship bias, either on purpose or lack of knowledge. Why is it important to understand survivorship bias? It’s important because it overstates backtested results and leads
Continue readingWhat Is The VIX And How Does It Work? (Is It Profitable?)
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” In the short-term, fear and greed is a major driver
Continue readingHow Does Pairs Trading Work? Is It Profitable?
Pairs trading involves market-neutral strategies that aim for profits in any type of market, be it sideways, down, or up. Jim Simons’ The Man Who Solved The Market describes the
Continue readingCan You Become A Quantified Trader? A Personality Test
Brett Steenbarger is a famous trading psychologist who has written the bestseller The Psychology Of Trading. In the book, Steenbarger referred to personality traits that tend to distinguish good from
Continue readingEd Seykota – Wisdom And Quotes
Anyone reasonably interested in trading and speculating has probably heard about Ed Seykota. He was first featured in Jack Schwager’s Market Wizards. It’s the most memorable interview in the whole
Continue readingProprietary Trading – Pros And Cons (A Personal Experience)
Proprietary trading might not be so different than retail trading. I was a proprietary trader from 2001 until 2018 in three different companies. How was it, and how does it
Continue readingThe Stochastic Indicator – Does It Work? (How To Use It)
The stochastic indicator is a standard indicator in any trading platform, but we rarely see it published in any trading strategies. Compared to the RSI, stochastics seems much less popular.
Continue readingIs Interactive Brokers Safe? Brexit Mess
I have been a customer at Interactive Brokers for the last 11 years, and on and off many years prior to that. Not only have I been a profitable customer
Continue readingHow To Overcome Trading Biases
Mankind has come a long way in problem solving and technical advancements, but most of us still suck when it comes to financial planning and managing our investments. We have
Continue readingHow To Succeed In Day Trading
How can you become a profitable day trader? How can you make money day trading? We were pure day traders (profitable) in stocks and indices from 2001 until 2018. In
Continue readingWilliams %R Explained – Does It Work? (Better than the RSI)
The famous trader and tax rebellion Larry Williams has given names to several technical indicators. Last week we wrote about WilliamsVixFix: WilliamsVixFix explained – does it work? This article explains
Continue readingEdward Thorp: Beating The Odds – The First Quant
Edward Thorp is by many regarded as “the first quant”, at least one of the first who successfully used quantitative models for risk-taking. He became famous when he wrote the
Continue readingWilliamsVixFix Explained – Does It Work?
Back in 2007, the well-known trader and “indicator innovator” Larry Williams wrote an article in Active Trader about VIX and how you can create your synthetic VIX for any security
Continue readingWhy Strategies Don’t Work In Live Trading
If you have spent considerable time developing a strategy, it’s frustrating if it performs poorly in live trading. What is happening? Why does it perform so poorly when it worked
Continue readingIs This The Holy Grail Of Trading?
Something that a person or a particular group of people want very much to have or achieve. Cambridge Dictionary defines the Holy Grail Many traders are looking for the Holy
Continue readingThe Most Common Trading Biases (How To Deal With Them)
The first principle is that you must not fool yourself and you are the easiest person to fool. – Richard Feynman When your money is at risk, you easily get
Continue readingWhy Day Traders Fail (Avoid The Pitfalls)
Day trading certainly holds promises of a fast-paced working environment with high returns. Its allure proves practically irresistible to many new traders. It is also a common belief that most
Continue readingTrading Strategies And Correlations
Correlation, which measures the relationship between two datasets, is an essential variable for a trader. How your positions move in relation to other positions is crucial to understand and manage
Continue readingHow Can A Beginner Start Trading?
Are you looking to start trading but are unsure what steps need to be taken? Or have you dipped your toes in the water but are struggling to find the
Continue readingRetail Seasonalities
Are there any seasonalities in retail stocks? Some years ago, Jay Kaeppel published an article about retail seasonalities. Put short, the best month for retailers are November, March, and February
Continue readingHow To Deal With Drawdowns
If you can’t stomach 50% declines in your investment, you will get the mediocre returns you deserve. Charlie Munger The share price of Berkshire Hathaway has declined more than 50%
Continue reading8 Pros And Cons Of Quantitative Trading
Quant trading, an abbreviation for quantitative/quantified trading, is growing in popularity because of the possibility of having the computer do all the work and reduce emotions and behavioral mistakes. This
Continue readingTrading Or Investing – What Is Best?
Trading and investing are entirely different ballgames. Both have the same aims, to grow your wealth, but they have various time commitments, risk profiles, and outcomes. Trading has been around
Continue reading