The MACD-histogram trading strategy is a mean-reversion system that identifies momentum changes and reversal points in the stock market. The strategy has generated 6669 trades on a portfolio of 77 ETFs, with long positions better than short positions. Let’s jump…
High Probability ETF Trading, published in 2009 and written by Larry Connors and Cesar Alvarez, contains some interesting strategies. They are all mean-reverting and tested on the most popular ETFs at the time of writing, which was the end of…
The Relative Strength Index (RSI) is one of the most Googled indicators in trading. “RSI 70” is often treated as a sell signal—yet crypto traders loves to fade that narrative. We quantified who is right by running two rapid-fire backtests…
What if a straightforward strategy could deliver solid returns with less risk? We backtested a simple trading approach using the SPY ETF, which tracks the S&P 500, and the results are compelling. By buying only after a down week and…
The stock market has been on fire for the last decade, causing the impression that it reached an all-time high almost every day. However, this is only a perception because all-time highs are quite uncommon. Let’s make an all-time high…
Ascertaining the market condition is often necessary but can be very difficult, which is why the choppiness index can be very powerful for your trading. What do you know about the choppiness index? The Choppiness Index is an indicator created…
There are many technical analysis indicators available on many trading platforms for analyzing the markets, and one of them is the market facilitation index (MFI). What do you know about this indicator and how to use it? The market facilitation…
Just as traders use technical indicators to attempt to predict the future direction of an asset, quantitative analysts also utilize various statistical and mathematical models to forecast the future values of assets, with one of these models being the Kalman…
The dual momentum trading strategy by Gary Antonacci, what is that about? As the Oracle of Omaha, Warren Buffett, once said: “Trying to time the market is the number one mistake to avoid.” It is almost impossible to consistently time…
Python is one of the most popular programming languages in finance. It is widely used for data analysis, machine learning and, of course, backtesting trading strategies. Today we will show you how to calculate and backtest a MACD, Moving Average…
The higher highs and higher lows pattern signals an uptrend. Is this likely to continue or reverse? In almost all markets, the higher high and higher low pattern signals weak future short-term gains. Unfortunately, it doesn’t work as a short…
The lower highs and lower lows pattern signals a downtrend. Is this likely to continue or reverse? What is the meaning of a lower highs and lower lows pattern? In almost all markets, the lower high and lower low pattern…
The Turnaround Tuesday Trading Strategy The Turnaround Tuesday effect happens from the close of Monday’s trading session until (at least) the close of Tuesday’s trading session. The effect is no myth! Let’s do some backtesting to find what seems to…
There are some indicators you can easily combine to get the best out of the market. The moving average convergence divergence (MACD) and Bollinger Bands combination is one of the best synergic indicator combinations. You can use it to trade…
The Internal Bar Strength indicator (IBS) has worked remarkably well for over two decades. We can only guess why, but the stock market has been highly mean-reverting during this period, and this has, of course, given the IBS a nice…
The SPY Small Caps Rotation System focuses on investing in small-cap stocks, typically valued between $250 million and $2 billion. This strategy aims to maximize growth by reallocating funds into these stocks during optimal market conditions. In this article, you…
The RSI trading strategy identifies overbought and oversold conditions in markets, measuring momentum on a scale. Readings above indicate overbought, while below signify oversold. Traders monitor divergence between price and RSI for potential reversals, often confirming with other indicators. Effective…
Determining your S&P 500 investment returns is crucial for financial planning. Using our s p 500 return calculator, you can gauge both historical performance and future potential. This article guides you through the process, ensuring you maximize the tool for…
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…
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…
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 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…
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…
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…
Yes, the SPY (SPDR S&P 500 ETF) tends to closely follow the movements of the ES (E-mini S&P 500 futures contract). The ES futures contract is based on the S&P 500 index and is a popular instrument for trading the…
Unlike investing, which focuses on long-term appreciation and wealth accumulation, trading is centered around capitalizing on short-term market fluctuations or exploiting price differentials and inefficiencies. To assess the effectiveness and performance of trading strategies, traders often rely on benchmarks that…
A pullback trading strategy is a trading strategy that involves buying a stock after it has experienced a recent decline in price. The rationale behind this strategy is that the stock is likely to rebound from its recent decline and…
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….
Trading indicators generally work best when combined rather than being used individually. However, in this case, we will introduce an indicator designed to function as a comprehensive trading system on its own: Traders Dynamic Index trading strategy. The Traders Dynamic…
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 Russell 2000 Rebalancing Trading Strategy is a method that takes advantage of the abnormal outperformance of the Russell 2000 index during its annual rebalancing at the end of June. Traders buy on the close of the first trading day…
One of the most frequently traded futures contracts, the E-mini S&P 500 futures tracks the popular S&P 500 index, which is an index of the 500 biggest stocks in the US stock market. Just as the S&P 500 index is…
An unfilled gap trading strategy happens when all the price action today is either lower than yesterday’s low (gap down) or higher than yesterday’s high (gap up). They are also profitable if we base our buy signals on additional criteria….
Today, we show you the performance data of a quarterly trading strategy that boasts substantially better risk-adjusted returns than buy and hold: Buy and hold returns 7.2%, while our quarterly trading strategy compounds at 9.8% if we adjust for much…
As a stock market trader, you must have been conversant with the phrases like a bull, a bull run, and a bull market. Those are phrases used to describe buying sentiment in the market. But what actually does bull market…
The SPY Day Trading Strategy presents an intriguing opportunity in the SPY market. By simply adhering to two straightforward criteria – a specific formula threshold and an open-down scenario – traders can potentially capitalize on market movements from 2005 to…
When it comes to trade entry and exit, most traders tend to think in singular terms — one shot in and one shot out. But breaking the position size into multiple smaller trade sizes and scaling in gradually may offer…
SPY tends to set its daily high and low during the first and last trading hours, which only make up 31% of the trading day. This suggests traders might find good times to enter or exit positions then, especially since…
With the S&P 500 index rising significantly over the years, the worth of the popular E-mini S&P 500 futures became out of reach to retail traders with small accounts. This prompted CME to create the Micro E-mini S&P 500 index…
The NR7 trading strategy is a narrow-range 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…
While you might not have known it by its name, you would have fallen victim to the bear trap, especially if you love “calling the top” of a reversal trade. Have you ever tried entering a short trade thinking the…
The overnight trading strategy in the S&P 500 involves entering a trade at the market’s close and exiting it at the following day’s open. This strategy relies on specific criteria like the Average True Range (ATR) and the IBS ratio…
The Tuesday Reversal Trading Strategy is a method used in the stock market, particularly focusing on the S&P 500 index. It involves observing a consistent pattern of reversal on Tuesdays and implementing trading tactics based on various scenarios, such as…
If you have been following the stock markets around the world, you would be conversant with stock market indexes, such as the S&P 500, DOW 30, NIKKEI 225, DAX 30, STOXX 40, CAC 40, and FTSE 100. Ever wondered about…
Discover 4 overnight trading strategies in the stock market. In this article, we unveil four trading strategies tailored for short-term gains in the S&P 500. These strategies capitalize on the momentum from the previous close to the next day’s open,…
The Triple RSI trading strategy is a modified version of the RSI strategy with four key variables, three of which are based on the RSI. It focuses on mean reversion, and the trading rules involve conditions related to RSI readings,…
The Bottom Of The Range Trading Strategy is a method for trading stocks or assets. It looks for times when a stock closes near its lowest point of the day and uses a specific formula called the IBS to confirm…
To many, trading stocks is all about making a single buy of a stock, waiting for it to reach your profit target, and exiting your trade. While that is an effective way to trade, you may be able to make…
With the emergence of personal computers and online trading via electronic communication networks (ECNs), you may think of tape reading as something ancient. While the term brings up memories of trading legends like Jesse Livermore, it is worth noting that,…
In this article, we will look at one of these traps; why does it happen? Who is responsible for them? Why does it concern you, and can you outsmart it? We show you how you can profit from a bull…
The first day of the month seasonality is strong in most markets. We have previously written about the turn of the month trading strategy, but today we look at the first trading day of the month. The turn of the…
You might stumble upon supposedly quantitative trading strategies based only on anecdotal evidence in the vast ocean of online resources. However, untested methods and strategies offer little more than hollow promises. We believe in providing examples of strategies that have…
Is it smart to own stocks over the weekend? On of the biggest financial websites writes that the weekend effect is a phenomenon in financial markets in which stock returns on Mondays are often significantly lower than those of the…
One of the most important factors in becoming a good trader is to know when you should NOT trade. The art of when to do nothing and just sit on your hands is just as important as anything else. So,…
Backtests and statistics of five different futures contracts reveal that most of the price action is random throughout the trading day. However, by implementing one or two extra variables, we find some potential trading edges or strategies. Let’s go straight…
The end-of-month seasonality is strong in stocks. A more updated version of the end-of-month effect was made not so long ago. Let’s make an update and see how it has performed since then: End of Month Trading Strategy In plain…
The end-of-month effect (also called the Ultimo Effect) is a well-known trading strategy in the stock market. We have covered this anomaly before. Perhaps what is lesser known is that the effect spills over to the first three days of…
A well-known “fact” is the end-of-month rally in stocks at the end of the month and the first day(s) of the next month. It’s a lot about it on the web, but as far as I can see no actual…
Monday is the most volatile day of the week for stocks. Volatility can be both good and bad. It’s to your benefit when you get it right but the opposite when you get it wrong. Thus, it might be of…
Traders and market analysts keep inventing new tools to navigate the ever-changing landscape of financial markets, and one such tool is the CMO Absolute Indicator. What do you know about this indicator? The CMO Absolute indicator is a momentum indicator…
The last trading day of the month offers trading opportunities. This is one of many seasonal trading strategies. Can we make a last trading day of the month trading strategy? The last trading day of the month is a weak…
Finding reliable sources of data to backtest your trading strategies can be difficult sometimes. Luckily, today we will show you a website to download historical economic data for free using Python. We show you how to download FRED data using…
While there are many technical analysis indicators available to the trading community, the Negative Volume Index (NVI) is a unique tool for analyzing the financial markets. What do you know about this indicator? Created by Paul Dysart, the Negative Volume…
Analyzing the financial markets and predicting how the market will move next can be a difficult task but can be made a bit easier with the Ease of Movement (EMV) indicator. What do you know about the Ease of Movement…
A time series analysis strategy might be helpful for traders. This article discusses practical tips & techniques and the essentials: forming objectives, selecting models, and preparing data for analysis. Whether you’re predicting stock performance or expecting weather changes, we provide…
The XLK/XLU ratio is the XLK ETF price divided by the XLU ETF price. It is often used to read market sentiment. A rising XLK/XLU is considered bullish, while a falling ratio is considered bearish. In this article, we backtest…
The S&P 500 is the most followed index in the world. As such, it catches a lot of attention when it is up for many weeks in a row. But how does it perform after being up for eight consecutive…
What happens when SPY is down 4 days in a row? Let’s test 4 down days in a row trading strategy. Entry is on the close and exit is on the first day with a close higher than the previous…
This Every Open Down Trading Strategy, tested with ETF SPY (representing the S&P 500), operates on a basic principle: buying when the market opens down and selling at the close, with specific criteria guiding entry and exit points. The simplicity…
This S&P 500 Reversal Trading Strategy offers a structured approach to potentially profit from market reversals, emphasizing the importance of meticulous testing and adaptability in the dynamic world of trading. Mondays and Fridays often bring about significant reversals in the…
Discovering profitable trading strategies can be both exciting and challenging. One such strategy, known as the Overnight Reversal Strategy, focuses on capitalizing on potential market reversals that occur specifically on Mondays and Tuesdays. By analyzing historical market data, this article…
Introducing the “3 Days Down Overnight Trading Strategy”: This strategy focuses on the S&P 500 index, tracking its movements over a three-day period. If the index closes lower for three consecutive days, a trade is entered at the close of…
Larry Connors and Cesar Alvarez revealed a trading strategy called Double Seven in their book Short Term Trading Strategies That Work. This is a fairly simple system that at the time worked very well among a wide range of ETFs….
SPY is very mean revertive and RSI is a mean revertive indicator. Does this mean that RSI works on SPY? In this article, we test an RSI SPY trading strategy. It turns out that our hypothesis is correct: the RSI…
Trend following the S&P 500 is probably not the sexiest thing to do. Back in 2012 Meb Faber published a paper called A Quantitative Approach To Tactical Asset Allocation in the Journal of Wealth Management. Meb Faber found the 200-day…
Below is a potential short strategy in the S&P 500: Short= C>Ref(C,-1) AND Ref(C,-1)>Ref(C,-2) AND Ref(C,-2)>Ref(C,-3) AND ADX(5)>35 AND RSI(2)>90 Description: If the close is higher for the third time in a row, 5 day ADX is bigger than 35…
The failed bounce trading strategy: Rob Hanna at Quantifiable Edges had an interesting article some days ago about bounces in the S&P 500. Let’s test his idea and turn it into a testable hypothesis: (This article was first published in…
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…
I have previously written two articles about when SPY sets high and low during the day: Which Trading Hour Is The Best? When Should You Buy And Sell During The Day? At what time of day sets SPY high and…
What is the return during the last hour of trading? A search on the internet reveals that traders should beware the last hour of trading and that volatility picks up. Let’s do some simple “fact-checking” on the S&P 500 and…
This article presents a last-hour trading strategy. This is in practice a momentum strategy. Here is the hypothesis: if SPY rallies from the open until the last hour, can we make money by going long one hour before the close…
Many momentum oscillators tend to turn very positive at the beginning of a major advance and quickly enter the overbought territory or even show bearish divergence while the market is still advancing. The ultimate oscillator is a type of momentum…
