Tail Risk Hedging Strategies – What Is It? (Tail Hedge Examples)

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 (Backtest, What Is It, Returns, Performance) [Trading & Investment]

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 Assets And Strategies – Benefits And Advantages (Non Correlated Examples And Backtests)

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…

Do Stocks Outperform Treasury Bills? (Not What You Expected)

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 – Best Trend Following System for Gold Trading (Backtest and Statistic)

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…

What Happens To Stocks When Bonds Go Up? (Trading Strategy Backtest)

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…

What Happens To Stocks When Bonds Go Down? (Trading Strategy Backtest)

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…

Is Meb Faber’s Momentum and Trend-Following Trading Strategy in Gold, Stocks, And Bonds Still Working?

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…

Are Covered Calls A Good Strategy? (Backtests And Examples)

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…

12 Reasons Why Trading Strategies Stop Working?

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…

6 Pivot Point Trading Strategies – A Backtest | How To Trade With Pivot Points? (Definition, Analysis and Performance)

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…

Do You Need Help Or Input In Your Trading? We Offer Consultation

We have been full-time traders and investors for over 20 years (successfully), and we believe we can offer some insights and help – no matter what trading-related issues you struggle with. Trading is a very lonely job, and getting feedback can be of tremendous value. You stand a much better chance of success if you…

Donchian Channels Trading Strategy – How To Trade And Do They Work? (Backtest Commodities And S&P 500)

What are the Donchian Channels and do they work on stocks? The Donchian Channels were invented by Richard Donchian decades ago. They are still a popular tool for traders, but the markets have changed a lot since Donchian’s invention. The Donchian Channels (or bands) are formed by two bands: an upper band based on the…

Portfolio Of Strategies – Adding a Strategy To Your Trading (Correlation and Diversification)

Does your trading strategy complement your portfolio of strategies? That is the first thing you should address if you are considering adding more trading strategies. Perhaps surprisingly, many strategies don’t complement each other because they are too similar and overlapping. Thus, you might end up adding more losing trades to your already winning trades.  How…

What Happens When Stock Markets Are Overbought?

When stock markets are overbought, we can expect weaker returns than average over the next few days. But in the long term, returns gravitate toward the average returns. Thus, overbought stock markets only predict short-term results – not long-term. This article tries to answer what happens when stock markets are overbought. Overbought means that markets…

How Does War Affect The Stock Market Historically? Should You Buy Or Sell?

How does war affect the stock market? Can we expect poor returns and increased volatility? Or is it a good time to buy when you hear the sound of cannons? Perhaps counterintuitive, history suggests that stock markets show less volatility during wars and geopolitical conflicts, and Nathan Rothschild’s famous quote “buy to the sound of…

Volatility Trading Strategies – Trade And Make Money In Volatile Markets (Backtest)

This article discusses different aspects of volatility trading strategies. Why volatility? In order to make money trading, you need prey. One of the prerequisites for trading is volatility. No volatility, no prey. No prey, no gains. Thus, it might pay off to trade during panics, stress, and volatility. It might be scary, but it’s normally…

Trading Edge – What Is It And How To Find The Best Edges? – Backtest, Examples And Strategies For Traders

How to find trading edges in the markets is crucial for surviving as a trader. The financial markets are a competitive place where amateurs and beginners are easy prey for the vultures further up the food chain. In this article, we look at trading edges. What is a trading edge? How to find an edge…

Short Selling Trading Strategies – Is It Possible To Make Money With Shorting Systems?

Short selling strategies are very difficult to find. But when you find one, the strategy might be one of the most useful and enjoyable. Enjoyable because is there a better feeling than making money when the market drops? Most people are losing, while you are making money. Schadenfreude is hard to get rid of. But…

Which Time Frame Is Best In Trading? [Day trading, Swing Trading & Trend Trading]

Which time frame is best in trading? We believe the best time frame in trading is daily bars. Every time frame has its pros and cons, but we recommend being agnostic and open for any time frame. You simply have to pick the best time frame that best suits your needs and where you can…

Failed Trader – How To Fail At Trading: 11 Skills Of The Unsuccessful (Inverse Thinking)

Failed Trader: What is the difference between a good trader and a bad trader? Always inverse, says the famous investor Charlie Munger, Warren Buffet’s friend and business partner. What is inverse thinking? This is when we turn a problem on its head or look at it backward. If a newspaper headline claims one-third of the…

Do Trend Following Trading Strategies Work? Why Does Trend Following Work?

Trend following has many followers, for some investors and traders trend following is like a religion. But does trend following work? And if so, why does it work? Yes, trend following does work. If we look at history, even simple trend strategies work remarkably well. In this article, we look at the MLM Index and…

Pros And Cons Of Short Selling – Why Is It Difficult? – [Short Squeeze] – Disadvantages Of Short Sellers

Short selling often makes headlines because of so-called short squeeze or when the media is full of predictions about a market top. Stocks are at an all-time high in terms of valuation, commodities have been on a roll, and interest rates are low (and can only go up?). Unfortunately, profiting from a bubble that bursts…

Tradestation Trading Strategies (Easy Language) Code for 70+ Systems – (More Platform Code On Demand)

If you are looking for Tradestation trading strategies you might not need to look any further. Since we started this website back in 2012, we have published a “ton” of ideas and strategies – FOR FREE! (But we also have a subscription service called Monthly Trading Edges.) However, the articles don’t come with Tradestation/Easy Language…

How Do You Do Overnight Trading? (How To Make Money Overnight Trading)

How do you do overnight trading? Is it possible to make money via overnight trading? Can you make money by owning stocks or indices just one day? Is overnight trading good? You do overnight trading by buying the close and either selling at the next day’s open or close. We have previously covered how you…