Stocks in the healthcare sector are affected by various factors, but they tend to be recession-defensive because health is essential to life. In this article, we look at a healthcare sector trading strategy. The healthcare sector might add diversification to your portfolio of trading strategies. The reason is that many of the stocks in this…
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 article, we take a brief look at the biggest stocks in the sector, and we…
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 example of a financial services trading strategy. The sector is great for trading due to…
Frequently you can hear about an inside day, especially in the stock market. What is an inside day in trading? Is an inside day profitable? Can you use inside days as trading signals and develop inside day strategies? In this article, we explain what an inside day is and backtest several markets whether an inside…
As the name implies, this sector covers different industries that make use of heavy equipment and involves high-level engineering. In this article, we discuss what kind of stocks that is within the industrials sector and how you can trade them. Unfortunately, in the industrials sector it is a lot harder to find profitable trading strategies…
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 S&P sectors to see what it offers. In this article, we describe the real estate…
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 not an easy one to trade, quite the contrary. We have backtested many strategies in…
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 strategy is a technical analysis model that states the U.S. market is in an upward…
One of the more peculiar effects on the S&P 500 is the huge difference in performance between odd and even days. It turns out that one type of calendar day is much better than the other. Can we develop a trading strategy based on odd and even days? This article shows a trading strategy that…
Many traders fear a bear market would be really bad for their trading. Is this true? Should you trade during a recession? What does the data say? We did some backtests to see what happens to a trading strategy in a recession (bear market) in our Substack newsletter. The article could be found here: Should…
Which is the best indicator for swing trading? There are many indicators to choose from, but in this article, we will try to answer which indicators that are best for this type of trading. There are many bells and whistles on the trading platforms, but we conclude that some indicators are much better than others….
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…
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 (trading systems) we have published since our start in 2012 (plus relevant trading strategy 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…
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…
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…
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…
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…
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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…
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 (Mebane Faber) found in some research from Ned Davis…
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? Are covered calls worth…
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 but enters on a day…
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…
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…
Quantitative trading or Quant trading has both pros and cons. In this article, we look at 8 pros and cons of quant trading. Even though we list both 8 pros and cons of quant trading, we believe the pros far outweigh the cons. The main reason for that is that you actually backtest an idea…
We have been investing and trading for about 21 years, but not until now have we ever looked at a pivot points trading strategy. We can read a lot about pivot points in certain media magazines and by stock commentators but have seen very little backtesting of any pivot point strategies. Below you find six…