The end-of-month 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 the next month. Thus, a more correct name might be the turn of the month strategy (or turn of the…
Merger arbitrage is a specialized trading strategy that seeks to capitalize on price differentials between a target company’s stock price and the offer price during a merger or acquisition. This strategy involves taking advantage of market inefficiencies created by the uncertainty surrounding such corporate events. But is it an effective strategy for trading? Does the…
Warren Buffett is for some considered the best investor of all time. Among his many lessons and contributions to the world of finance, one that stands out is the Warren Buffett indicator. This indicator is a measure of valuation for the entire stock market relative to the size of the economy. But how is it…
IPOs are one of the most frequent corporate events in the market. They get a lot of press coverage, and it is not unusual to see large pops on the first day of trading. But the question is: how do IPOs perform in the short and long term? IPOs perform well early, during the first…
In trading, you need a positive expectancy, and you might want to use leverage to utilize that edge. However, the balance between greed and fear is always a thin line. If you lose most or all of your capital, it’s very tough to fight back. We asked: Should you use leverage in trading? Our reader…
The world of stock trading is a dynamic and ever-evolving landscape, where traders employ a wide array of strategies to capitalize on market movements. However, sometimes very basic strategies can perform really well. The 5 consecutive higher open trading strategy is based on the idea that if the market has been going up, it will…
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 is designed to reduce exposure to specific market risks and can be applied in one…
Most readers of this website have probably heard about the Turnaround Tuesday effect in the stock market. But does the day of the week matter if it’s a bull or bear market? Let’s look at how the different days of the week perform in bull or bear markets. Trading rules [am4show have=’p2;p3;p58;p59;p130;p138;’ user_error=’Premium Post Access’…
A trading strategy needs to have a positive expectancy, but you also need to manage risk to protect your capital. How do you manage risk? We have conducted plenty of reader polls, and you find them all in our article about trading strategies statistics and facts. What is risk? We define risk as the possibility…
Here is a simple mean reversion twist in SPY that holds the S&P 500 just one day (from the close to the next day’s open or close). It’s an overnight trading strategy, the lowest-hanging fruit in the stock market (?). This article was initially published in 2013, and it’s about time we updated it. We…
