Representativeness heuristic bias in trading happens when traders make quick decisions based on superficial similarities to past situations or stereotypes, rather than thorough analysis. This shortcut often leads to poor investment choices and losses. In this article, we explore what…
The Dunning-Kruger Effect bias in trading can lead to overconfidence and costly mistakes. This cognitive bias causes novice traders to overestimate their abilities, ignoring risks and misinterpreting market data. In this article, you’ll learn how this bias impacts trading and…
The Ultimo Effect is a fascinating seasonality pattern in the stock market that savvy traders use to their advantage. Observed during the final days of each month, the Ultimo Effect refers to a tendency for stock prices to rise as…
Projection bias in trading leads traders to project their current emotions onto future market conditions, often resulting in poor decisions and financial losses. This article explores how this bias influences trading and provides strategies to recognize and mitigate its impact….
Michael Saylor’s Bitcoin strategy for MicroStrategy, often referred to as the “michael sailors microstrategy bitcoin strategy,” has been a game-changer in corporate finance since August 2020. By viewing Bitcoin as ‘digital gold,’ Saylor aimed to hedge against inflation and improve…
Herding bias in trading happens when investors follow the crowd rather than their own analysis. This can lead to poor investment choices and market instability. Recognizing and understanding herding bias is crucial for protecting your investments. In this article, we…
Analysis of the financial markets today has become so much more scientific, as professionals from different fields of science try hard to solve the market puzzle, and this has led to indicators like the Prime Number Bands. What do you…
Seasonal futures spread trading involves simultaneously buying and selling related futures contracts to profit from predictable seasonal price changes. This strategy leverages the cyclical nature of supply and demand in various markets, such as grains and energy. By understanding and…
The financial markets may seem random in the way they move, but with certain technical analysis tools, like the Zigzag Fibonacci, you might find that the movements follow a certain pattern. What do you know about the Zigzag Fibonacci? In…
Below we have a few selected End-Of-Day Trading Strategies. (EOD trading strategies) Since we started writing in 2012 we have presented over 200 free trading strategies, and we present a monthly trading edge for our paying subscribers (which you also…
Zero-lag exponential moving average strategy backtest (ZLEMA) The moving average is no doubt one of the most widely used technical indicators. While there are different traditional types, many variations are being created all the time to improve on the old…
Volume-weighted average price strategy backtest Several indicators are used for technical analysis; some of these indicators combine different market data to tell a better story about what the market is doing. The volume-weighted average price (VWAP), which combines both volume…
Triple exponential moving average strategy One of the not-so-common moving average indicators used by traders is the triple exponential moving average (TEMA). It is an important trend indicator used by traders to identify trends more closely than a traditional moving…
Triangular moving average strategy backtest Moving averages are the most common and useful technical indicators in forex trading, owing to their effect in smoothening out price movements and showing the actual direction of the trend. There are various types of…
S&P 500 trading strategies can sharpen your market understanding. This article delivers straightforward techniques for trend, momentum, and volatility trading, providing the know-how for strategic market engagement. Understand when to enter and exit the market with strategies suited for different…
The exponential moving average strategy is one of the most commonly used among traders. But do you know what it is? And do you know if an exponential average strategy can be used profitably in the stock market? Backtests indicate…
What Does A Follow Through Day Mean In Trading? As a stock trader, you may likely have asked this question several times: “How do you identify a stock rally?” That might have been the question that led William J. O’Neil…
Dogs Of The Dow (DOD) Some investment strategies allow you to enjoy maximum dividend income, and Dogs of the Dow is one of such. But what does it really mean and how has it performed lately? Dogs of the Dow…
In this article, we present some Larry Williams trading strategies. Larry Williams has marked his name in the register of successful traders. He has authored several books and is very popular in the trading industry. Born on 6th October 1942,…
The real estate industry group, previously stuffed inside the Financials sector, was elevated to a market sector level in 2016, making it the 11th sector in the S&P 500 index. Let’s take a look at the newest addition to the…
The material sector is considered the primary producer in the supply chain because the companies here provide the raw materials used by other industries. Stocks in this sector tend to do well in a strong economy. However, the sector is…
IWM is the ticker symbol for iShares Russell 2000 ETF, which is one of the main ETFs that track the Russell 2000 index. The ETF provides a way to invest in the index and gain exposure to small-cap U.S. stocks….
The information technology sector has the highest weighting in the S&P 500 index, representing more than a quarter of the index’s market cap. Over the last decade, the sector has been “hot” and had a spectacular bull market. In this…
With the tight regulations that followed the 2008/2009 financial crisis, this sector has been stable with steady growth. But let’s see what it has to offer. In this article, we discuss the US financial sector and we show you an…
Energy sector trading is the process of gaining exposure to multiple stocks in the energy sector as a means of diversification and generating profits. Investment can be done by buying an ETF that tracks the sector or by building a…
The Dow Theory is widely considered one of the earliest forms of technical analysis in the western world and has always been a very integral part of technical analysis since then. But what is the theory about? The Dow Theory…
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…
The 5-Day Low Overnight Trading Strategy focuses on trading the S&P 500 when it opens at a 5-day low but closes higher than its opening price. This strategy involves entering trades at the close and exiting when the market opens…
This Big Down Day Trading Strategy, centered around the SPY ETF, focuses on identifying significant downward movements and capitalizing on them. By analyzing simple variables like the average difference between daily highs and lows over a specific period, we unveil…
I believe experience is the most important asset for any speculator. In this article, I explain why experience matters in trading. It’s simple: the longer you survive, the fitter and stronger you get, and thus more fit to prey on…
Simple Moving Average Trading Strategy revolves around the use of a simple moving average (SMA), which is a technical analysis tool that helps traders identify the direction of a market trend by averaging the closing prices of a security or…
Variable moving average strategy backtest Traders have always looked for ways to improve the performance of the exponential moving average, and using a volatility index (VI) to adjust the smoothing period as market conditions change has given rise to the…
The Weighted Moving Average (WMA) is a valuable technical indicator employed by traders to assess the direction of trade and assist in making informed decisions on when to buy or sell. This article looks at the math, theory, and basics…
How do you do overnight trading? Is it possible to make money via overnight trading? Can you make money by owning stocks or indices for just one day? Is overnight trading good? You do overnight trading by buying the close…
Does trend following work in 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, but in…
Pairs Trading Strategy involves being neutral to the direction of the market. This article looks at what pairs trading is, how it works, and its advantages and disadvantages (pros and cons). The main benefit of pairs trading is market neutrality….
Today we’ll present a strategy that we first wrote about some years ago – an article called big moves on Mondays – but we have made a small twist to the strategy. We call the strategy for the Big Reversal…
Introducing the “3 Day Low Trading Strategy”! This strategy is based on Larry Connors’ double 7 method and aims to capitalize on the stock market’s mean-reverting tendencies. It involves identifying ETFs that close at a 3-day low and have an…
Hull moving average strategy backtest Experienced traders know that the best trading indicators are those that can reduce lag, eliminate noise, and quickly respond to sustained market changes. The Hull Moving Average (HMA) seems to tick those boxes. What do…
What are the worst days of the year for trading stocks? Let’s find out and test from the year 2000. We did a backtest where we optimized the month and trading day to find the WORST trading days for the…
Three german researchers have written a study called Is Poker a Game of Skill or Chance? A Quasi-Experimental Study. I was made aware of this article in Peter Warrens’s blog (only in Norwegian). I totally agree with the content. Most…
Gap down trading strategies in stocks capitalize on downward price gaps between trading sessions. This strategy outlines specific entry and exit criteria to exploit these opportunities effectively. Entry occurs on the next trading day if certain conditions are met, while…
Gap fill trading strategies are popular among traders, especially when it comes to playing the opening gap of the S&P 500. But what exactly is an opening gap? This article explores the basics of gap trading strategies, focusing on understanding…
I guess most traders have heard that “the trend is your friend“. Personally, I don’t do trend-following strategies, I go the opposite way: buy weakness and sell strength – mean reversion strategies. However, this depends on the instrument you trade…
Trading SPY And S&P 500 Using VIX (VIX Trading Strategies). The VIX is a popular measure of the implied volatility of S&P 500 index options. Put shortly, the VIX is a mean reversion indicator: when the risk premium increases (VIX…
Previously I wrote an article about the detrimental effect of using stop-loss. What happens if we reverse it? Does using a profit target create any value? When trading it’s mentally very hard to see a nice gain turn around into…
Are there any daily seasonalities in the S&P 500? I did some research into SPY, an ETF based on the S&P 500 components and a very good proxy, based average return on which day of the month. To get a…
How important are the best days compared to total profits? In trading, you want to avoid negatively skewed trading strategies. These are strategies that have fat left tails and might wipe out all your profits from many trades. You need…
This article presents a SPY volume trading strategy. Understanding the significance of trading volume in SPY and the S&P 500 ETF is crucial. This article explores the relevance of volume in SPY trading and presents findings from historical data analysis…
QQQ Trading Strategies and Systems The QQQ is the largest and most liquid ETF that tracks the Nasdaq Composite Index. It is a popular investment vehicle for both individual and institutional investors. However, successfully trading the QQQ can be challenging…
The common belief is that large-cap stocks don’t perform very well because they are already big and they don’t grow at high rates. However, is this true? What is the large-cap effect (factor) trading strategy? In this article, we are…
Of the many classifications a stock can have, one of the most significant is relative to its size. It is well known in the market that small caps tend to perform better than large caps, something called the small-cap effect….
The PENTAD Timing Model By Nelson Freeburg is an active, complicated strategy that uses four stock indices and one advance/decline line for producing buy/sell signals. This timing model is designed for the US stock market. Using this timing model, you…
Taking advantage of the popularity of Tradingview and its powerful tools for technical analysis, we will explore Bollinger Bands and their potential for creating a trading strategy. Stay with us until the end to see how we use the tools…
Meb Faber’s Tactical Asset Allocation strategy is an active trend-following strategy that uses market timings and allocates assets across four asset classes: stocks, bonds, REITs, and commodities. These four asset classes are divided into five categories: U.S. stocks, foreign stocks,…
Is there a safe investment asset strategy? A while back, Meb Faber published a white paper called What Is The Safest Investment Asset. Faber wanted to answer if there is such a thing as the safest asset in the world….
Italy is one of the most beautiful countries in the world, and it certainly has one of the best foods. However, they have struggled to grow their economy and, accordingly, their stock market. The Italian stock market is currently trading…
Commodities, being closely tied to weather patterns and economic activity, exhibit high cyclical characteristics. Similarly, stocks also display cyclical tendencies. Given this, is there an opportunity to capitalize on their optimal performance? The commodities to equity ratio tries to do…
A Russell 2000 Death Cross occurs when the 50-day moving average of the Russell 2000 index crosses below its 200-day moving average. This is often seen as a bearish signal, but a new study by Rob Hanna on his blog…
The world of stock trading is a dynamic and ever-evolving landscape, where traders employ a wide array of strategies to capitalize on market movements. However, sometimes very basic strategies can perform really well. The 5 consecutive higher open trading strategy…
Let’s look at at price pattern that shows that Tesla’s stock price booms every time this happens. It doesn’t happen often, but it has worked well so far: Tesla’s Stock Price Booms Every Time This Happens The trading rules are…
Introduction to the Z-Score Trading Strategy: The Z-Score is a statistical measure used in finance to assess a company’s financial health and its likelihood of bankruptcy. The Z-Score Trading Strategy employs this metric to make improved investment decisions. The Z-Score…
The channel breakout trading strategy is one of many ways to trade breakouts. Breakouts are a popular trading strategy. As the name suggests, this method involves identifying and capitalizing on significant price movements as an asset breaks free from its typical…
Wheel Trading Strategy The wheel trading strategy is a popular options trading strategy that involves generating income from options by buying and selling puts and covered calls. It is a systematic approach to trading options, allowing investors to potentially generate…
Crafting a strategy that adapts to changing conditions is crucial for success. One such strategy gaining attention is the ETF sector rotation trading strategy. In this case, we are going to be focusing on the Consumer Staples and Consumer Discretionary…
Investing in international stocks can be a rewarding venture, offering diversification and access to global opportunities. However, the decision to buy stocks when they are at all-time highs can be met with skepticism. But a question arises: Is it profitable…
Gold is one of the most famous commodities in the world and is a great diversifier for those trading mainly stocks. However, its price has gone nowhere in the past decade, so we decided to test some strategies and try…
The utility sector has taken a major hit over the last couple of weeks. Below is XLU, the ETF that tracks the sector: But as you can see, it’s not the first time it has “collapsed”, but it has caught…
The advent of Artificial Intelligence is here, and is forecast to combine with and revolutionize many industries in the years to come. One such combined industry is ‘Robotics and AI’, and traders are increasingly seeking ways to position themselves to…
Mean reversion has worked very well on most Western stock indices for about four decades since the advent of futures trading. It has worked even better during the bull market after the financial crisis in 2008/09. Perhaps counterintuitive, long strategies…
Volatility goes up and down in any financial market. Low volatility is often followed by periods of high volatility and vice versa. Bollinger Bands are one of the tools a trader can use to measure volatility. What is the Bollinger…
A market-neutral strategy is a type of investment approach that enables an investor to benefit from both rising and falling stock prices. This is achieved by taking long positions in one stock and short positions in another stock. The strategy…
Channel trading can be profitable when used correctly. It can help you to track and speculate on the prevailing market trend, especially if you are a swing trader. But it can also be used in range-bound markets. Both mean-reversion traders…
Bear market strategy refers to the techniques traders and investors use to trade the market during a bear run. They include entry, exit, trade management, and risk management strategies investors use to protect their assets and even make some profits…
Investors and analysts are always looking for ways to analyze the market, and one method of evaluating the current price of a stock to determine whether it is relatively overpriced or underpriced compared to the average trading price for the…
The Utilities sector is known to outperform the S&P 500 index when there are market downturns, especially during periods of recession. Let’s take a look at the sector and discuss an example of an utilities trading strategy. Utilities trading strategies…
Identifying core strengths, weaknesses, opportunities, and threats leads to fact-based analysis, fresh perspectives, and new ideas, which are the benefits of a SWOT analysis. SWOT analysis is a technique for assessing the performance, competition, risk, and potential of a business,…
Stock indexes are widely used as benchmarks for tracking a basket of stocks within a particular sector or segment of the market. Investors use the indexes to assess the overall health of the sector, they compare the performance of their…
Momentum trading is the opposite of buying low and selling high: momentum is about buying strength. Can we make a successful momentum strategy for S&P 500? Yes, a momentum strategy for the S&P 500 works. We use monthly bars and…
When should you sell a stock or position? Many articles and videos deal with when to buy, but less focus is on when to sell. When should you sell? What method should you use to sell? What is the best…
Today we will look at a strategy published by Michael Gayed in his paper An Intermarket Approach to Beta Rotation: The Strategy, Signal and Power of Utilities. Gayed’s paper is among the most downloaded papers on the SSRN website. The…
It’s possible to make Friday Jobs Report trading strategies. One of the most important macro numbers on this planet is the monthly US job report. As a bonus, at the end of this article, we provide you with the code…
One of the best edges in the stock market is the overnight edge – the price action from the close until tomorrow’s morning (or close). Is it still working? Can a trend filter improve performance? Empirical evidence – the overnight…
What happens in the coming days after a very bad Friday when the stock market goes down? Let’s backtest and find out if we can make any money from it. Friday 22nd of April was a very bad day in…
This article shows a rotation strategy between healthcare stocks and the S&P 500. The trading idea is pretty simple, but it beats the buy and hold of the S&P 500. Moreover, we believe this strategy is more rational than at…
In 2022 the bond market experienced the worst drawdown in its history, and since then volatility has been off the charts. It seems like rates are moving like tech stocks did in 2000. Luckily, this can be seen through the…
One often-mentioned expression in the financial markets is “risk on risk off”. What is it, and can you use it to develop a profitable risk on risk off trading strategy? A risk on risk off trading (RORO) strategy takes advantage…
A big part of a successful trading strategy is seasonal trading. As we are about to see, this is especially true in commodities. Today we will look at a silver seasonal trading strategy where we invest only in the best-performing…
Bond trading strategies are a great inclusion in a portfolio of strategies because they offer diversification and, most likely, uncorrelated returns. Bonds are complementary. First, you might want to have a look at other articles related to bond trading strategies:…
Analyzing price movements to find trading opportunities can be a daunting task, even for an experienced trader, but one tool that can help is the Time Segmented Volume (TSV). What do you know about this indicator? The Time Segmented Volume…
Exploring the bearish three line strike can offer traders critical insights into potential market reversals. Our guide demystifies this pattern, detailing how to spot and interpret it and integrate it into your trading arsenal. Key Takeaways What is a Bearish…
Double candlestick patterns are common, and this article explains what they are and which candlesticks can be called double candlestick patterns. They are used to predict continuation or reversal patterns, and we show you which ones are good and how…
Do you want to make more informed trades using triple candlestick patterns? These patterns can provide significant cues about future price action. Our article offers a pragmatic guide through identifying and interpreting triple candlestick patterns like the Three White Soldiers,…
Ready to decode the market with single candlestick patterns? These indicators can alert you to potential price movements with just a glance. In this article, we dissect each pattern’s significance and show you how to apply single candlesticks for strategic…
If you’re spotting a bearish tri star doji on your chart, you might be witnessing a critical shift in market sentiment. This concise guide will unravel what this rare pattern suggests about the balance of power between bulls and bears,…
The ‘Bullish Abandoned Baby’ pattern is a potential trend reversal pattern. In this article, you will learn about its characteristics, strategic trading tips, and the overall significance of this pattern in predicting bullish market shifts. We’ll also address its rarity…
Candlestick Patterns have become the preferred technical analysis tool of many investors and traders, partly due to their easy-to-read and colorful markings, and the fact that they form many different types of chart patterns. One such pattern, which is the…
Candlestick Patterns have gained a lot of popularity among new traders and form a lot of patterns that are believed to predict the future moves of the market. One such pattern is the bullish homing pigeon. The bullish homing pigeon…
When a Bullish In Neck Line surfaces on your chart, it’s a critical moment to decide for trading strategy. Is the current uptrend set to continue, or is the Candlestick pattern a sign of an impending reversal? This article demystifies…
A bullish harami cross often intrigues traders as it suggests a potential shift from bearish to bullish momentum. This article swiftly cuts to the chase on how to identify the Candlestick pattern, its implications for market sentiment, and how to…
