Do Candlesticks Pattern Work? Are They Reliable? A Quantitative Backtest Of 23 Candlesticks (Trading Strategy)

Candlesticks are a popular charting tool and are frequently used by promoters using anecdotal evidence. We use candlesticks in our charts ourselves, but not as a predictive tool in our trading strategies. In this article, we ask: do candlesticks work? Yes, candlesticks work. We test 23 different candlestick patterns quantitatively with strict buy and sell…

Candlestick Pattern – Doji Trading Strategy (Backtest and Historical Performance)

Doji trading strategies are popular and the doji pattern is one of the most famous candlestick patterns. Candlestick patterns have several “derivatives” and can be used together with other bars. There are at least 64 different candlestick patterns that have been given a name, please read our article about how many candlestick patterns are there?…

3 Bullish Candlestick Patterns That Work (Backtest and Historical Performance)

Very few bullish candlestick patterns work, but this article presents 3 bullish candlestick patterns that work. Even though Candlesticks are a popular charting method, very few of the patterns have any predictive value. We use candlesticks extensively ourselves for charting because we believe they give a very good visualization of the price action, even though…

What Is The Put Call Ratio? Does It Work? (Backtest And Strategy)

The Put-Call ratio is a popular sentiment indicator. Extreme readings, mostly signaling panic and climax, are often used as contrarian signals to fade the market. For example, a high put reading might signal that traders and investors are panicking and are buying downside insurance (put options act as insurance) and that a market bottom is…

Can You Day Trade With Daily Bars? Is It Even Better? (Day Trading Strategies And Backtests)

You might wonder which time frame to watch when day trading. Instinctively you might believe you need intraday bars, ie bars 5-minute bars, 60-minute bars, etc. However, after reading this article we hope you are reconsidering. Can you day trade with daily bars? Yes, you can day trade with daily bars. As a matter of…

3 Volatility Strategies To Get You Started Trading Volatility – (Trading Strategy Bundles)

3 Volatility Strategies To Get You Started Trading Volatility – (Trading Strategy Bundles)

This bundle consists of three strategies that can be labeled volatility strategies. The idea and logic work in a variety of assets. In all our bundles you will find both Amibroker code, Tradestation code, and the strategy written in plain English. The strategies are long-only due to the nature of the index. 2 strategies are…

3 Beginner Strategies In SPY and ES (ETF and Futures) – (Trading Strategy Bundles)

3 Beginner Strategies In SPY and ES (ETF and Futures) – (Trading Strategy Bundles)

We have put together a “strategy pack” (bundle) of 3 strategies in S&P 500 (SPY or ES). The bundle consists of three strategies that we believe complement each other. In all our bundles you will find both Amibroker code, Tradestation code and the strategy written in plain English. The strategies are long-only due to the…

Consumer Confidence And Stock Market Returns (Strategy And Backtest)

Consumer confidence tries to gauge the temperature of the economy. It swings from pessimism to optimism – just like Mr. Market who is rather manic-depressive. In the US it’s made by the Conference board and it casts doom and gloom on a monthly basis. Consumer confidence measures optimism (or lack of optimism – pessimism) in…

Which Trading Hour Is The Best? When Should You Buy And Sell During The Day?

Which trading hour is the best? Does the time of day make a difference when trading? When should you buy and sell during the trading day? Seasonal trading strategies can take many forms and in any time frame. This article looks at intraday data for some of the most traded futures contracts. There is no…

Nassim Nicholas Taleb – The Barbell Strategy (Options, Trading Strategies And Philosophy)

Nassim Nicholas Taleb is a world-known statistician, mathematician, philosopher, trader, and investor, and his primary interests evolve around randomness, uncertainty, and probabilities. Taleb came into the limelight after his book called Black Swan became a best seller, but in our opinion Fooled By Randomness from 2001 is his best and most interesting book, at least…

AAII And Market Sentiment Indicators – How To Trade It (Examples And Backtests)

Can you make money on a bullish or bearish AAII market sentiment indicator? When the pessimists turn optimistic and the optimists turn pessimistic a bottom or top is formed. If you understand market sentiment and where traders and investors feel the most pain or euphoria, you have gained a wealth of knowledge about potential turning…

Tail Risk Hedging Strategies – What Is It? (Tail Hedge Examples)

How can you hedge against huge losses from totally random and unpredictable events? How can you insure yourself from devastating losses that come out of the blue? This is what tail risk hedging strategies are all about. Tail risks in the stock market are hard to protect against, but in this article, we offer some…

Ray Dalio’s All Weather Portfolio (Backtest, What Is It, Returns, Performance) [Trading & Investment]

Ray Dalio’s All Weather Portfolio is a pretty well-known portfolio, and for good reasons, in our opinion. Ray Dalio and his team at Bridgewater Associates constructed the All Weather Portfolio to withstand every economic environment (and shocks) possible. What exactly is the All-Weather Portfolio? Which assets are included? How has it performed? What was the…

Ray Dalio – Life, Investment And Trading Strategies, And Philosophy

Ray Dalio is one of the world’s most known investors. Who is he? How does Ray Dalio invest? What is his famous All-Weather Portfolio? What are Ray Dalio’s investment strategies? These are some of the answers we answer in this article. At the end of the article, we have collected and assembled many quotes taken…

Rory Sutherland Alchemy Summary – Being Slightly Bonkers Can Serve You Well In Trading

Rory Sutherland Alchemy Summary. The models that dominate all human decision-making today are duly heavy on simplistic logic, and light on magic – a spreadsheet leaves no room for miracles. But what if this approach is wrong? What if, in our quest to recreate the certainty of the laws of physics, we are now too…

Uncorrelated Assets And Strategies – Benefits And Advantages (Non Correlated Examples And Backtests)

Uncorrelated or non-correlated assets and strategies are a traders’ goldmine. Why? Because it reduces risk and (might) increase returns. However, constructing a basket of stocks, assets, or strategies that are uncorrelated or non-correlated is probably the most difficult task in trading and investing. In this article, we show you examples and backtests of the power…

Quadruple Witching Day – What Is It And Is It Bullish Or Bearish? (Quad Witching Backtest)

Quadruple witching day (quad witching)- facts vs myths. Because the quadruple witching day is surrounded by presumable myths, we would like to dig deeper into these rare days that happen only four times per year. Is quadruple witching a volatile day? Is the volume higher than normal? Is it a bearish or bullish day? Do…

Do Stocks Outperform Treasury Bills? (Not What You Expected)

Hendrik Bessembinder, an academic, published a study in 2017 that went on to become widely spread and known. His hypothesis was pretty straightforward: do stocks outperform Treasury Bills? No, most stocks fail to beat one-month Treasury Bills during their lifetime as a public company, a fact we assume few investors expected or knew. Between 1926…

Gold Moving Average Strategy – Best Trend Following System for Gold Trading (Backtest and Statistic)

Gold Moving Average Strategy and Trend following systems work. Below we present a very simple trend following system in gold: In this article, we look at how you can use the 12-month (250-day) moving average to outperform the gold price. Gold spends most of the time going nowhere, and it seems the 12-month moving average does…

The Best Moving Average Indicator – A Comparison and Backtest of all variants of MA Trading Strategy

Moving average trading strategies are widely discussed and used in the media and likewise frequently used by analysts when making calls about the future. What is a moving average and can we find profitable moving average strategies on stocks? Backtests reveal that moving averages work best for short-term mean reversion and long-term trend-following. However, moving…

What Happens To Stocks When Bonds Go Up? (Trading Strategy Backtest)

Any stock investor or trader should have a basic understanding of the relationship between stocks and interest rates. Why? Because the interest rates influence investors’ risk appetite. When interest rates are high, you need to pay more for a company’s earnings (thus a lower PE ratio). What happens to stocks when bonds go up? When…

What Happens To Stocks When Bonds Go Down? (Trading Strategy Backtest)

The relationship between stocks and interest rates is at the center of financial theory. Why? Because the interest rates determine the value of stocks. High rates equal less appetite for owning risky assets, and investors will only own risky assets if they are compensated for taking this risk. What happens to stocks when bonds go…

What Percentage of Trading Is Algorithmic? (Algo Trading Market Statistics: Growth, Trends, and Forecasts)

Since the emergence of the internet, algorithmic trading has come to dominate the financial trading world, but what percentage of trading is actually algorithmic? About 60-75 percent of overall trading volume in the U.S. equity market, European financial markets, and major Asian capital markets is generated through algorithmic trading, according to Select USA, in 2018….

Is Meb Faber’s Momentum and Trend-Following Trading Strategy in Gold, Stocks, And Bonds Still Working?

Meb Faber, a famous money manager and writer, has several times stated he is a trend follower at heart. Back in 2015, he published an article about momentum and trend-following strategy called Meb Faber’s Three-Way Model in gold, stocks, and bonds– a model that Meb Faber found in some research from Ned Davis Research. However,…

Are Covered Calls A Good Strategy? (Backtests And Examples)

Covered calls look tempting when interest rates and dividend yields are down because many investors and traders look for additional ways to generate “income”. Many pundits promise both good returns and “income” if you issue call options on your positions – so-called covered calls. Can you make money on covered calls? We look at covered…

Mark Spitznagel – Safe Haven Investing (Review, Takeaways, And Summary)

Mark Spitznagel, Safe Haven – Investing For Financial Storms: What role can risk-mitigating and defensive assets play in a portfolio? Do we use them only to seek shelter until the passing of financial storms? Contrary to what we learn at schools and universities, can higher returns actually come as a result of lowering risk? In…

Trading Bias – The Most Common Trading Biases (How To Deal With Them)

Trading bias, you better have an understanding of the most common ones. When your money is at risk, you easily get fooled by your behavioral biases. Trading is about decision-making, and you better understand your strengths, weaknesses, and what puts your emotions on fire. This article explains the most common trading biases, why it’s essential…

12 Reasons Why Trading Strategies Stop Working?

Why Trading Strategies Don’t Work In Live Trading. Trading strategies perform poorly in live trading mainly because of behavioral mistakes, curve fitting, survivorship bias, and improper trading size changes. It’s hard to replicate an unbiased backtest to live trading. If you have spent considerable time developing a strategy, it’s frustrating if it performs poorly in…