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…
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…
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…
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…
High Probability ETF Trading, published in 2009 and written by Larry Connors and Cesar Alvarez, contains some interesting strategies. They are all mean revertive and tested on the most popular ETFs at the time of writing, which was the end…
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…
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…
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…
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…
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….
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,…
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…
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…
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…
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…
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…
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…
Golden Cross Trading Strategy is famous and a cited phenomenon in the media. In this article, we look at the performance of the Golden Cross in the S&P 500. A Golden Cross involves two moving averages – one short and…
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…
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…
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 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…
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…
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…
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….
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…
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…
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…
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…
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…
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,…
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…
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…
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…
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…
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…
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…
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…
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…
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…
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:…
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…
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…
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…
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….
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…
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….
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…
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…
Most traders attach trendlines across one swing side of a trend to delineate its direction. But to appreciate the individual price swings within a trend, you may need to have a price channel to see the up-and-down swinging movement of…
TradingView is a financial platform that offers tools for traders to visualize market data, create and share technical analysis, and develop and backtest trading strategies. The platform offers a variety of tools including charting, indicators, drawing tools, and alerts. It…
After decades of relying on fossil fuels to power the economy, there is increasing demand for Clean Energy such as solar, wind, and geothermal power. As the world seeks to transition into a green energy future, many traders now seek…
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….
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….
Professional traders have their unique ways of trading, but one thing that is common among them is that they do not follow the crowd. They follow their specific trading plans and use their own strategies. But what are professional trading…
Let’s test the strategy Turnaround Tuesday but only in bear markets. Does that work? Turnaround Tuesday is one trading idea that has worked very well for many decades. We have covered it on our website multiple times. We are now…
Spin-offs are a popular corporate action that company management and boards may pursue to unlock value or narrow down their focus. Many famous investors, such as Joel Greenblatt, Seth Klarman, and Charlie Munger, have voiced their support for spin-offs as…
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…
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…
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…
A profitable trading strategy is one that consistently makes money over a reasonable period of time. It is not just enough for a strategy to make some winning trades over a short time because market conditions can change and it…
Here is a trading strategy that are rotating between S&P500 and Treasuries. There exist many strategies that rotate between S&P 500 and Treasuries. Over the weekend we had a look at the white paper of Meb Fabe called A Quantitative…
Equal weight and market weight are two different methods to build an index. The S&P 500 is famously a market-weighted index, like most stock indices. But the question that pops up is: Which type of market weighting performs best –…
When the dollar weakens, oil prices often rise, presenting opportunities for astute traders. This article delves into a simple yet effective trading approach based on simultaneous movements in the dollar and oil prices. By understanding this dynamic relationship, investors can…
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…
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…
There are different ways to skin a cat, they say. This is true in trading as well. While some find their edge in the market with the help of trading indicators, others trade the price action, and the rabbit trail…
We already discussed how to create and backtest a trading strategy using Chat GPT in a prior article and video, but today we are going to skip the idea generation stage and jump right into the trading rules and backtest:…
The Dow Jones Industrial Average is the oldest stock market index in the world. However, it is not as popular as the S&P 500 or the Nasdaq nowadays. But this doesn’t mean it can’t be traded profitably. In this article,…
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%…
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…
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…
Burton Gordon Malkiel in his famous book — A Random Walk Down Wall Street — popularized the random walk model of the financial markets. According to him, the market moves randomly and its direction cannot be predicted with technical or…
Stock and sector rotation is when you switch between different asset classes or stocks. In this case, between different asset classes. We did a backtest involving SPY, TLT, and LQD. It’s a strategy backtested by many and in different ways,…
Introduction: Understanding Dumb Money in Trading The term “dumb money” in Dumb Money trading strategy refers to a group of investors who are considered to be less sophisticated or experienced than other participants in the market. These investors may make…
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….
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…
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…
Most price charts are time-based in the sense that a price bar represents price movement over a specified period of time. However, there are other chart types that are not based on time but, rather, on a specified price movement…
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…
Interested in spread trading? It’s a strategy where traders open opposing positions in related markets, aiming at profits from the price gap. Our article takes you through 12 top strategies for spread trading, covering the essentials and diving into advanced…
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…
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…
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…
Because of its potential for quick profits, the short-term trading strategy is the most popular trading method among retail traders. Unlike traditional long-term investing methods, this strategy offers an exciting opportunity to profit from relatively minor changes in market conditions….
In a previous article, we highlighted the difference of changing the entry method: entry on the next day open (1) vs. entry on the same day close (2) vs. entry on the next day with a limit order (3). For…
What does gold trading mean and what about Gold Trading Strategies? Gold, along with crude oil, is one of the world’s most widely traded raw materials. It is undoubtedly the most popular precious metal, both financially and culturally. Gold Trading…
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…
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…
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….
A small account trading strategy refers to the trading methods and risk management approach a trader can apply to grow a relatively small account. Starting trading with a small account means having to use leverage and making fewer trades. Thus,…
If you have a potential trading strategy, which market are you going to backtest it on? And what do you do if it works on S&P 500 but not so well on Russell 2000? This article uses the same trading…
Here are 20 soft commodities trading strategies you are going to learn. For those trading soft commodities like sugar, cotton, and coffee, a strategic edge is key. This article explores effective soft commodities trading strategies, offering insight into market analysis,…
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…
“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…
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…
Volatility and bear markets are related: volatility “always” picks up when the market goes down. Is this good or bad for a trader or investor? Should you buy or sell stocks in a volatile market? Let’s find out: Short-term traders…
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…
A Fair Value Gap (FVG) trading strategy involves identifying and capitalizing on price jumps caused by imbalanced buying and selling pressures in the market. These gaps, also known as Price Value Gaps or Singles, occur when the supply of buyers…
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…
