Zweig Breadth Thrust Indicator is a market breadth indicator that helps you understand the internal strength of the market, at least that’s what the theory says. There are many breadth indicators – among them the Zweig Breadth Thrust Indicator (one of many). The best way to measure market breadth is by looking at the number…
Why trade the XLU and utility stocks? Even though utility stocks are probably one of the most boring stocks, they offer diversification. In this article, we discuss the consumer staple ETF XLU, why it’s a great trading vehicle, and why it might complement your other trading strategies very well. XLU is much less volatile than…
In 2009 Atul Gawande, a professor of surgery, published a book called The Checklist Manifesto – How To Get Things Right. The book is a good read and is relevant for most professions, not to mention what we do in our private lives. Why? Because in a complicated world it’s easy to make mistakes by…
Pullback Trading Strategy. We have previously discussed and written why the 200-day moving average works: because you play defense if a severe recession hits. But can you combine a long-term defensive trend-following strategy using the 200-day moving average with a long-term pullback trading strategy? In this article, we backtest a combination of a long-term trend…
We wanted to ask for a quick favor that would really help us out. We’re trying to collect video (or written) testimonials from happy users of our products and services, and we thought you would be perfect to seek help from. All we need is for you to record a quick video (between 30-120 seconds)…
It is important to be able to identify the beginning of a new trend; equally, it is also important to be able to identify the end of a trend. A well-timed entry fits perfectly with a well-timed exit. The parabolic stop and reverse (SAR) indicator is one trading tool that can tell us a lot…
The futures market is exciting because of its good liquidity, and unlike equity day trading, there is no reasonable entry barrier, as you can start with as low as $500. But what exactly are futures? Futures are derivative financial contracts that obligate a trader to buy or sell an asset at a predetermined future date…
One of the most ideal investment vehicles for beginner investors, ETFs have grown in popularity since they emerged on the financial markets. But what is an ETF, and how is it traded? An exchange-traded fund (ETF) is a basket of securities that is traded as a single instrument, which you can buy or sell through…
Traders often look for ways to measure the price momentum. The rate of change (ROC) is one of the most commonly used indicators for that. Let’s take a look at the indicator. Often referred to as the momentum indicator, the rate of change (ROC) is a momentum-based technical indicator that compares the current price of…
Discretionary trading is becoming increasingly difficult and even unprofitable, as the markets have become more efficient. This is why smart traders now make use of data-driven strategies. But what are they? Data-driven strategies are essentially a method of trading that is based on data analysis and automated trading using computer algorithms. That is, trading algorithms…
Many momentum oscillators tend to turn very positive at the beginning of a major advance and quickly enter the overbought territory or even show bearish divergence while the market is still advancing. The ultimate oscillator attempts to correct that. Let’s find out what this oscillator is made of. The ultimate oscillator (UO) is a momentum…
Many traders are pair trading ETFs. Pairs trading is one method of making your strategy less exposed to market fluctuations. Most traders trade stocks, but you can, of course, also trade ETFs. If you are trading ETFs you indirectly have a wide diversification, albeit to different segments of the stock market. In this article, we…
This article looks at how likely you are to go broke as retired or FIRE. Low interest rates make many pensioners and those who retire early (FIRE) allocate more and more capital to risky stocks. Many tend to forget that a bear market can last for a decade – even longer. What happens to the…
The higher highs and higher lows pattern signals an uptrend. Is this likely to continue or reverse? In almost all markets, the higher high and higher low pattern signals weak future short-term gains. Unfortunately, it doesn’t work as a short strategy. The higher highs and higher lows pattern The pattern is pretty self-explanatory, but let’s…
The lower highs and lower lows pattern signals a downtrend. Is this likely to continue or reverse? What is the meaning of a lower highs and lower lows pattern? In almost all markets, the lower high and lower low pattern signals a short-term reversal. We develop multiple lower high and lower low trading strategies. The…
In the stock market, and especially in trading, it’s easy to fool yourself. The famous scientist Richard Feynman once said that the first principle is that you must not fool yourself and you are the easiest person to fool. Trading involves decision-making all day long, and decision-making ends with a good or bad outcome. Unfortunately,…
One of Warren Buffett’s investment advice is, “Be fearful when others are greedy and greedy when others are fearful!” That basically explains the contrarian trading strategy. The contrarian trading strategy is one that goes against the prevailing sentiment in the market. In other words, it is a trading method that seeks to trade in the…
Most investors and traders are aware of the differences between dollar-cost averaging vs lump sum investing. But what role do luck and randomness play in determining the best strategy – dollar-cost averaging or lump sum investing? In this article, we dig a bit deeper and turn the returns over the last twenty years upside down…
What is the return during the last hour of trading? A search on the internet reveals that traders should beware the last hour of trading and that volatility picks up. Let’s do some simple “fact-checking” on the S&P 500 and find out the return during the last hour of trading. Based on the results you…
The semiconductor industry is the backbone of the tech revolution of the past decades and stocks in the industry dominate the IT sector of the S&P 500. SMH provides a way to invest in a portfolio of these semiconductor stocks. SMH is the ticker symbol for the VanEck Vectors Semiconductor ETF, a 25-stock basket that…
Opening range breakout trading strategies are popular strategies, perhaps because of Tony Crabel’s classical trading book published in 1990: Day trading With Short Term Price Patterns And Opening Range Breakout. 31 years after it was published we still see an abundance of opening range breakout strategies on the internet. But do opening range breakouts work?…
Yes, our backtests indicate that there is an end of month effect in Bitcoin and this can potentially be a viable turn of the month trading strategy. The end of month effect, sometimes referred to as the turn of the month effect, is well known in US stocks and most other stock indices all over…
Which oscillating indicator is the best for trading strategies? When you start out in trading it might be a daunting task to understand all the bells and whistles provided by your trading software. There are plenty of indicators, moving averages, and oscillators to use. How can you use the indicators to make money? In this…
Slippage is probably the enemy number one for short-term traders. What is slippage in live trading and how much slippage can you expect to have in live trading? What is slippage in real trading? Slippage in trading is a hidden cost that is difficult to quantify. It’s the difference between a theoretical price and the…
Does RSI work on crypto or Bitcoin? Bitcoin and other cryptos are attracting many traders and new investors, and the crypto daily volume is rising significantly, probably draining resources from the more traditional stock trading arena. The crypto market is a completely new market that is quite different from the traditional equity markets. One reason…
We believe the best way to learn to trade is by backtesting and trial and error, but you can get valuable input from traders who have been successful. This post is a collection of some of the top motivational trading quotes we have collected during the last 20 years. The post is a work in…
The Euro Bund futures contract shows weak seasonal performance during the futures expiration week. The contract has ticker code FGBL, is issued by Germany, has a maturity between 8.5 and 10.5 years, and one contract has a value of 100 000 EUR. It’s a heavily traded futures contract that expires four times per year: on…
Our backtests indicate that both DAX 40 and Euro Stoxx 50 have much better performance during the futures expiration week compared to any other random week. Let’s start with the DAX 40 contract: DAX 40 futures contracts expire four times per year: the third Friday of March, June, September, and December. The contract is one…
The Euro Stoxx 50 has mixed performance the week after futures expiration. Euro Stoxx 50 is a very popular trading vehicle. It’s one of the most traded futures contracts in the world. The contracts expire on the third Friday of the last month of each quarter: March, June. September, and December. If you are not…
What percentage of traders fail? What percentage of traders are successful? How likely are you to succeed as a trader? Frequently, we read that 90% of traders fail to make money and just a tiny fraction of traders are able to make money over time. Is this number correct? Our research suggests that about 70…
The Euro Bund (FGBL) shows significant positive performance following the expiration of the previous future contract. The Euro Bund (FGBL) is a bond contract with a maturity of 8.5 to 10.5 years. It’s issued by Germany and one contract has a value of 100 000 EUR. EuroBund is a popular trading vehicle and is heavily…
The Congressional Effect in stocks– we suspect you have never heard of it. Neither had we! But this is one of the many seasonal effects in the stock market. The man behind the effect, hedge fund manager Eric Singer, had so much faith in this seasonal effect that he set up a fund to profit…
Our backtests suggest that NIFTY 50 has a positive end of month effect. A variation of the inputs does not change the result dramatically, thus the end of month effect seems reasonably robust. The end of month effect is well documented in the US stock market, sometimes referred to as the turn of the month…
The Santa Claus Rally in DAX and Euro Stoxx 50 Our backtests show significantly better performance during the Christmas season and the end of the year. The Santa Claus rally is no myth in Europe, either! The end of year rally in DAX40 is alive and well. It’s a pretty well-known “fact” that stock markets…
Trading the week after futures expiration in DAX 40 This article looks at the performance of the DAX futures contracts in the week after the expiration of the contract. DAX 40 was changed in 2021 from DAX 30 and is one of the most heavily traded futures contracts in the world. The contracts expire on…