This article presents a stock trading system that only trades stocks. It has beaten buy&hold and (10.4% vs 7.5%) with a much lower drawdown. This is the equity curve and the complete trading rules are presented further down in the…
There are many momentum and trend indicators out there, but the Qstick indicator is not one that shows up very often. What is the Qstick indicator? The Qstick indicator is a technical indicator that consists of two moving averages and…
Mean reversion strategies come with their own set of advantages and disadvantages relative to trend-following strategies. However, just as when implementing a trend-following strategy, knowing the statistical behavior of your asset is of vital importance when it comes to mean…
There are certain trading strategies that you can trade based on price action alone. One of them is the HHLL trading strategy. You may be wondering what the HHLL trading strategy is. Here you go: The HHLL trading strategy is…
Connors RSI including backtest Often referred to as CRSI, the Connors RSI indicator is a momentum-based oscillator that tries to improve on the original 14-period RSI indicator developed by Welles Wilder. Unlike the original 14-period RSI indicator, the CRSI uses…
Smoothed moving average (Wilder’s) strategy backtest The smoothed moving average is not as common as other moving average indicators, but you will come across it in your trading journey. So, it’s good to know what it means. Can a smoother…
The best indicator for swing trading is Williams’s %R. It is one of the least known or used indicators but definitely one of the best swing trading. We tesed six indicators and based our conclusions not necessarily on the highest…
How I Trade For A Living by Gary Smith was (and still is) a popular trading book. We bought the book just days after it was published in 1999, in the midst of the dot com frenzy, and we have…
The Death Cross in trading is a widely cited phenomenon in the financial media. As of writing, the media is full of stories about the price of Bitcoin being close to the Death Cross. In this article, we look at…
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…
It’s easy to fool yourself in the stock market, especially in trading. 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…
Penny stocks offer a low entry and often the lure of striking it big. The internet is full of stories about how you can make millions and gain thousands of percent of returns in penny stocks. Is it any reality…
I was recommended by my partner Hakan to read Pit Bull by Marty Schwartz when we were on a two-month proprietary trading course in Phoenix, Arizona, back in 2003. Pit Bull is entertaining, a relatively quick read, and perfect for…
How to overcome fear of loss in trading is for many a huge obstacle that is hard to overcome. Fear in moderate doses is healthy, but it might also limit your trading if fear overtakes control of your decisions. Fear…
Adaptive moving average strategy backtest (Kaufman’s adaptive moving average) We know that traditional moving averages smoothen price series to reduce noise and show the trend. However, when price makes a temporary but significant leap, it can still give the appearance…
As an investor, you would want to know whether your investment’s return is worth the risk. There are different methods you can use to measure the risk-adjusted performance of your portfolio, and the Jensen Ratio (Jensen’s Performance Index) is one…
CAGR, or Compound Annual Growth Rate, is crucial for trading strategies as it measures the mean annual growth rate of an investment over a specified period. It’s essential for comparing the performance of different investments and assessing their risk and…
Today, there are so many indicators used in technical analysis, but only a few are really valuable to retail investors and traders. These indicators are not just used for technical analysis of stock prices but are also used to get…
Below, you will find backtested and researched trading ideas and analysis. They contain performance metrics, statistics, risks, historical performance, and figures. We do investment research and analysis based on statistics and history for informational and educational purposes. This is factual…
Variable Index Dynamic Average strategy backtest Over the years, chartists have developed indicators to help them analyze the market better. While there are many of these indicators, a few stand out for their usefulness. One of such is the Variable…
Fractal adaptive moving average strategy backtest Many new forms of moving averages have been created, but not all of them are easy to calculate. The fractal adaptive moving average is one of those unique moving averages, but it offers great…
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…
Richard Dennis is one of the world’s most famous traders, mostly because of the Turtle Experiment. In this article, we look at Dennis’ life and trading career, and additionally, we explain what the Turtle Experiment was. We end the article…
This article looks at Howard Seidler, one of the traders that were taught by Richard Dennis in the famous Turtle Traders Experiment in the 1980s. Dennis argued you could teach a group of people who knew nothing about trading to…
Rina Index is a performance metric that measures the risk to return ratio. Rina index was created by RINA systems in an attempt to find a performance metric that takes time, drawdown, and profit into consideration. Below we will go into how the…
Sortino Ratio is a performance metric that measures the risk-adjusted return of an investment using only the downside risk. Considered a variation of the Sharpe Ratio, Sortino Ratio uses only the standard deviation of the negative returns as its risk…
We rank Williams %R as the best oscillating indicator for trading strategies. It’s certainly not the most known nor the most used, but in our humble opinion, our backtests proved Williams %R to be the most stable indicator for almost…
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…
Why trade the DAX index and a DAX trading strategy? The DAX index is the main equity index in Germany. It’s one of the most popular trading vehicles in the whole world and has a tremendous daily volume. Because of…
Pair trading strategies with Exchange-Traded Funds (ETFs) are gaining traction among traders seeking to mitigate exposure to market fluctuations. While many traders primarily focus on individual stocks, ETFs offer a diversified approach to trading various segments of the stock market….
The Gold Stocks Strategy, revolving around GDX (Gold Miners), suggests buying if GDX rises by more than 0.1% from open to close and selling short if it rises similarly the day before. With results showcasing profits of 273.27% and 185.97%…
The 5-Day Low of The Range Strategy, with its simple criteria of IBS lower than 0.25 and the close lower than the lowest low of the previous 5 days, has shown remarkable results. Over the period from January 1993 until…
I have finished rereading David Aronson’s book Evidence- Based Technical Analysis, Applying the Scientific Method and Statistical Inference to Trading Signals, a book I bought back in November 2007. This is no easy read and a bit technical, but worthwhile…
The correct mindset in trading is often “the missing link” in order to perform well. To get steady returns you have to focus on the trading mindset just as much as the analysis and strategies. What is the correct mindset…
I have just finished reading Curtis Faith’s The Way of The Turtle (for the second time) and below you find some very short comments about the book. This is a very good book! If you’re a beginner or not very…
How to gain a trading edge by knowing yourself is crucial for success in trading. In previous articles, I have written about how to find trading edges in the markets, but in this article, I look at how you can…
How to make money day trading doesn’t have an absolute answer – there are many ways to become a successful and profitable day trader, even though it’s not easy. However, I have been day trading successfully, and in this article,…
Victor Niederhoffer’s The Education Of A Speculator is a must-read for any aspiring quant. It explains the foundation and principles of successful speculation. In this article, I give a brief review and summary of the book, ultimately sharing my main…
I bought this book many years ago. It’s not about trading, but about poker and selling. However, all the elements are relevant for stock traders. Besides, this book is much better than all the other books I’ve read about psychology….
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…
It would be best if you built a portfolio of trading strategies that differ in markets, time frames, and types. Why? Because you want to have a portfolio of trading strategies that both complement each other and make the portfolio…
RSI is mostly used as a reversal or contrarian indicator. In most stock markets, this has worked really well over the last 30 years. But what if we flip it and use it as a momentum indicator instead to make…
The arithmetic vs geometric averages can be difficult to grasp. Albert Einstein is famous for saying that compounding is the eighth wonder. But what if he is wrong? Perhaps multiplicative compounding is the most destructive force in the universe? The…
Programmers and coders often fail in trading because they look at the market like science. But the market is completely different from math and other sciences. The market is non-stationary, non-binary, and evolves all the time. You need “alpha skills”,…
Why day traders fail boils down to at least 16 reasons. This article explains why day traders fail and what you can do to survive and perhaps even prosper. Why day traders fail is mainly because they don’t understand the…
Trading offers a very scalable career, while investing offers lower risk and less scale. Short-term trading requires excellence, while long-term investing only requires average abilities to succeed. What is best for you depends ultimately on your goals and personality. Trading…
A reader recently asked if we use Heikin Ashi Candlestick in our trading. So what exactly is Heikin Ashi? In this article, we will reconsider the price representation called Heikin-Ashi, and try to get something good out of the charting…
Yes, you can get rich from quant trading, but many factors must go your way. Quant trading is challenging, just like any new business startup. Most quant traders fail. Competition is stiff, and you need to know your place in…
Can we make a profitable MACD trading strategy with the help of the MACD indicator and the MACD histogram? This article examines the MACD indicator and its use to create a MACD trading strategy. It explains what the indicator is…
Is it possible to use the ADX indicator (Average Directional Movement Index) (DMI) to find a profitable ADX trading strategy? This article looks at the ADX indicator where we make some historical backtest to evaluate and analyze. The adx indicator…
The Short Guide To Systematic And Mechanical Trading Systems is the first (and so far only) book in English: I have written four books in Norwegian: Aksjekjøp og daytrading – metode, psykologi, risiko og strategier (foreword by Mads Johannesen). 30…
We have put together a “strategy pack” (bundle) of 4 strategies for S&P 500 (SPY). We have not backtested on @ES, but it might work if trading the same opening hours as SPY. Buy and sell orders are backtested…
Can price action trading strategies leverage market prices effectively to enhance your trading decisions and strategies? By analyzing pure price movements, these strategies help traders anticipate future market trends and pinpoint high-probability trades without relying on complex indicators. This article…
In today’s computer-driven, fast-paced market, monitoring the limit order book may help you predict price movements. But what is the limit order book trading strategy? The limit order book trading strategy is based on the order flow. The limit order…
The high-frequency trading strategy is a method of trading that uses powerful computer programs to conduct a large number of trades in fractions of a second. It is a type of algorithmic trading strategy that uses high speeds, high turnover…
There are many kinds of funds, ranging from illiquid private equity funds to highly liquid mutual funds and ETFs that are available to the public. Hedge funds occupy the sweet middle, but what are hedge fund trading strategies? Hedge fund…
You must have heard about fundamental analysis whether you trade stocks, futures, or forex. Many market pros, such as portfolio managers, hedge fund investors, and investment bank professionals, use fundamental analysis. But what the fundamental analysis strategy actually entails? A…
The financial markets may seem to move randomly, but they actually move in repeating patterns and trends. One indicator traders use to take advantage of the patterns is the fractal indicator. What is it? Fractal Indicator Trading Strategy is the…
It’s a well-known fact that as options expiry day approaches, the biggest-cap stocks with actively traded options tend to witness huge trading volumes (and sometimes increased volatility). In fact, the most important day in stock trading is the expiry day….
With investors becoming more concerned about their risk-adjusted returns amid bearish and flat market environments, interest in event-driven strategies has gained momentum. But what are event-driven trading strategies? An event-driven strategy is a trading approach that seeks to exploit pricing…
With e-minis, the Chicago Mercantile Exchange’s Globex electronic trading platform has made it possible for individuals with less capital to play the futures and commodity markets from around the world. It is one of the most efficient and cost-effective ways…
In this post, we take a look at the Elliot Wave trading strategy. At the end of the article, we present you with an Elliott Wave strategy. In the 1920s and 1930s, stock market analyst, Ralph Nelson Elliott, discovered that…
Different order types can result in vastly different outcomes, which is why it is important to understand the type of order you use. If you want your order to be filled at your specified price, go for a limit order….
Hedge funds employ many investing strategies, and the long-short equity strategy is one of them. But what does this long-short equity strategy mean? Long short equity strategy is a method of investing whereby a trader takes long positions in stocks…
Some people hold their trades for short periods, even as little as a day, while others hold theirs for quite a long time. While the former is known as short-term traders, the latter are called long-term traders. But what does…
Chart patterns are one of the most powerful for analyzing price action. They help you to understand the rice structure and the state of the trend. Pennants are one of the common chart patterns traders look out for, but what…
For most retail traders, trading is mostly about technical analysis using trading indicators applied to a price to look at the current forces in the market. While technical indicators may play a significant role in trading, professional day traders don’t…
There are different ways to participate in the financial markets, and some of them have been structured to involve just predicting the market direction. One such easy but risky trading method is Nadex trading. Wondering what Nadex trading strategies are?…
Understanding volume and price, and how they can influence the market, is very important in trading. Since volume is the measure of activities in the market, traders can use the information provided to increase the probability of their trades. A…
Momentum trading strategies are the practice of buying and selling assets according to the recent strength of price trends. Traders who use the strategy aim to buy securities that have been showing an upward price trend and short-sell securities that…
Meme stocks seem to be on everyone’s mind recently, with constant mentions in market summaries and analyses. These stocks gain traction on social media platforms, such as Reddit and Twitter (please follow us on Twitter), often sparking lively debate. While…
Options trading is popular, and especially retail traders enter the options market at market bottoms and tops. We frequently receive questions about how to trade options, in both QQQ and SPY. Below is a short summary of the most frequently…
A risk-adjusted return is a measure of return that compares the potential profit from an investment to the degree of risk that must be accepted in order to achieve it. The reference point is usually a risk-free investment, such as…
There are different strategies for trading the market, such as trend following, price action, scalping, momentum, Martingale, mean-reversion, and so on. All are risky, but the Martingale trading strategy is known for its huge risks. What is this strategy and…
Of course, companies release their earnings reports every quarter. If you are a short-term trader, you may have wondered whether to buy a stock before or after the release of its earnings report. What is the earnings report trading strategy?…
Globalization has made it possible for investors to tap into investment opportunities around the world, and as the second largest economy in the world, the Chinese stock market provides opportunities. But what is your China trading strategy? You can also…
Considered a part of the technology sector, biotech stocks represent an important part of the Nasdaq market, and they tend to have big growth potential. But what are biotech stocks? Biotech is an industry group that includes companies that research…
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? And can you find profitable…
ETF trading strategies can be a very nice addition to your trading strategy arsenal. This guide breaks down key ETF tactics including trend following, mean reversion, and more, to give you a better understanding of how you can trade ETFs….
The DMI trading strategy is often known on most trading platforms by its third component, the average directional index (ADX). Not many know what the DMI is. Let’s take a look at it. The DMI (directional movement index) is a…
The CCI (Commodity Channel Index) is a technical indicator that measures the current price level of a security relative to an average price level over a given period. It is a momentum oscillator that is used to identify extreme conditions,…
In the financial trading world, FOMO refers to the fear that a trader or investor feels when missing out on a potentially lucrative investment or trading opportunity. A trader’s fear of missing out becomes greater the more the market continues…
Market breadth indicators provide different information about the stock market in a way that other market indicators do not. But what is the market breadth? Market breadth indicates the total number of stocks that are rising in price relative to…
Commodity trading strategies involve buying and selling commodities in financial markets based on various analytical methods and market trends to generate profit. Commodity trading is the exchange of various commodities, such as agricultural products, crude oil, natural gas, and metals,…
Hounds of the Bay is another investment strategy that allows you to enjoy maximum dividend income. But what is Hounds of the Bay all about? Named after the Canadian financial center, the Bay Street, Hounds of the Bay is a…
The Investors Intelligence Index is becoming widely accepted as a means of estimating the balance between the bulls and bears. But what does it actually mean? Also known as the Advisor Sentiment, Investors Intelligence Sentiment Index is based on contrarian…
Technical indicators offer powerful insights into what is happening in the market. While price is a factor in technical analysis, volume is as important as price as this tells traders the level of activity on a given security. The On-Balance…
It seems that traders are becoming increasingly interested in the classical methods of technical analysis, and trading channels have become popular again in the 21st century. Since Williams Volatility Channel is getting very popular among traders, you may wonder what…
In addition to “The Disciplined Trader,” Mark Douglas also authored another influential book titled “Trading in the Zone.” Published in 2001, this book further expanded on the principles of trading psychology and explored the importance of cultivating a mindset that…
Many trading indicators are available to traders. One of the indicators used in the stock market is the DeMarker indicator, named after Thomas DeMark, a prominent technical analyst. This indicator is a part of a trading system that incorporates bollinger…
A carry trade strategy involves borrowing at a low-interest rate currency and converting the borrowed amount into another currency with a higher interest rate to invest in an asset that provides a higher rate of return. If you are active…
“If trading is like chess, then macro trading is like three-dimensional chess. It is just hard to find a great macro trader.” — Paul Tudor Jones. Many of the world’s biggest hedge fund managers and institutional traders focus on macro…
What is in Bill Williams Awesome indicator strategy? Williams stated in his book, “It is, without doubt, the best momentum indicator available in the stock and commodity markets. It is as simple as it is elegant.” That’s a bold statement….
You must have heard the stock market adage: “Buy low and sell high.” It is possibly the most popular slang in stock trading. Buying at the all-time low may be a perfect way to implement the adage, but does it…
Sweden has a vibrant stock market, with many interesting companies like AstraZeneca, Atlas Copco AB, and Ericsson. You can track the performance of the Swedish market with the OMX Stockholm 30 and OMX Stockholm PI indexes. OMX Stockholm PI is…
Stock market crash trading strategy. Volatility is a normal thing in the stock market — the prices of individual stocks and market indexes fluctuate all the time. But there are times when volatility is to the extreme, giving rise to…
Market indicators are an integral component of technical analysis. They help traders in making market decisions. Some indicators are designed to show the direction of a trend while others simply tell when a trend reversal is imminent. In this article,…
For many, the approach is to buy low and sell high. But that is not the case with the 52-week high trading strategy – you do the opposite. What is the 52-week high trading strategy? The 52-week high strategy is…
