We have yet to see much quantified backtest of candlestick patterns. Practically all candlestick “analysis” is based on anecdotal evidence and some random charts showing successful trades (and ignoring the bad ones). Do candlesticks really work? We decided to find out and we sat down to quantify ALL the candlestick patterns that exist. Over the…
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…
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?…
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…
Turtle trading strategies are a trading approach named after Richard Dennis’ popular trading experiment in 1983. The experiment was to determine whether trading was an inborn skill or could be learned. The turtle trading experiment was a huge success, and the strategy employed by those traders was very successful all through the 1980s. But does…
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 is a stock-picking strategy for selecting the highest dividend-paying Dow stocks. This investment strategy attempts…
This short-selling strategy bundle consists of three short strategies. The idea and logic work in a variety of assets, not only the three different below. Entries are on the close or the next open (and the same for exits). In all our bundles you will find both Amibroker code, Tradestation code, and the strategy written…
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…
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 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…
George Washington’s Day/Presidents’ Day is one of the federal holidays in the US. But does it affect the US stock market? The US financial markets do not open on George Washington’s Day or Presidents’ Day. Trading does not take place on any of the U.S. stock exchanges. Backtests determine that trading around this holiday is…
The founder of Investor’s Business Daily (IBD), William O’Neill developed the CANSLIM method to help him pick the best stocks. In his best-selling book called How To Make Money In Stocks O’Neill went on to describe his method in detail. CANSLIM is a method on how to make money in stocks, but does it work?…
On this page, we have compiled all the trading strategies we have published since our start in 2012 (plus trading relevant articles). The page contains 80+ free trading strategies plus articles about indicators and trading strategy-specific articles. If you don’t want to browse through all the articles, we have compiled the code for all articles…
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…
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…
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 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…
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 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 (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…
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 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…
If you are having problems downloading purchased trading strategies, please make sure you are logged in. You can purchase our monthly Trading Edges/strategies one by one or in discounted bundles (this page contains the monthly Trading Edges one by one): Buy one strategy for 149 USD. Buy 5 for 495 USD. Click here and choose…
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…
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…
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….
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,…
There are plenty of potential option strategies, and one of them is selling puts. In this article, we look at how you can make money by writing or selling puts. Is selling puts a good trading strategy? Selling puts might be good for you if you know what you are doing, and it could be…
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…
When stock markets are oversold, we can expect strong returns over the next few days. But in the long term, returns gravitate toward the average returns. Thus, oversold stock markets only predict short-term results, not long-term. We do a backtest to prove our point. When there is “blood in the street” the media takes interest…
The NR7 trading strategy is a strategy that is both well-known and popular. If you do a search on the internet you get multiple hits on the strategy. To our knowledge, the strategy was first developed by Tony Crabel as long back as 1990. The NR7 is a volatility strategy. In this article, we backtest…
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…
Is the stock market a zero-sum game? You frequently hear media refer to games and markets as zero-sum games. Yes, we define the stock market as a zero-sum game, both in the short and in the long term, although it technically is incorrect. A zero-sum game is where one person’s gain is another person’s loss…
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…
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…