During my early days as an investor/trader in the early 90’s, I was told (in many books) that an up day that finishes near the low of the range is a bad sign. Is this true? The only way to find out is by backtesting. Backtesting is the core of what we do and we…
Today SPY opened down about 0.8%. From then it has fallen even more, and in time of writing is down 1.5% since the open. A quite tough day for the longs. Looking at what has happened on similar days since January 2010 (open more than 0.7% down and falling more than 1% from the open)…
I had a look at my performance on one of the new strategies I’ve implemented over the summer and fall. Here are the previous first two posts I wrote: Part 1 Part 2 I started trading this strategy live in July with the lowest minimum size I can possibly trade. Now I’m about to put…
Do you know the average return in the S&P 500 separated into trading days and day of the week? In this article, we look at the average gain per trading day and day of the week. The best days are centered around the first and last days of the month. We also find out that…
Yesterday (on the 23rd) SPY closed below the previous day’s 5 day low. Even more, SPY gapped down and never traded over the previous day’s low. Some days back I wrote an article about a possible strategy to buy SPY when it closed below the previous day’s 5 day low. That strategy is in my…
The 5-Day Low And Low of The Range Trading Strategy Here is the strategy in plain English: Trading Rules [am4show have=’p2;p3;p58;p59;p130;p138;’ user_error=’Premium Post Access’ guest_error=’Premium Posts’] IBS must be lower than 0.25. The close must be lower than the lowest low the previous 5 days. If those two simple criteria are met, go long at…
In a previous article, I wrote about when SPY sets a high/low. But is there any difference separated by weekday? Here is the number from January 2010 until the 1st of August 2012: #Number High Low High Low of days First hour First hour Last hour Last hour Monday 119 44 43 29…
I believe experience is the most important asset for any speculator. In this article, I explain why experience matters in trading. It’s simple: the longer you survive, the fitter and stronger you get, and thus more fit to prey on other weaker players in the market. Experience will minimize overconfidence and ego. The markets are…
Mean reversion strategies work well in the stock market. One of the best indicators for such strategies is the Internal Bar Strength Indicator (IBS): (HIGH-CLOSE)/(HIGH-LOW) This simple formula increases the odds a lot, in my experience, for mean-revertive assets like stocks and stock indices. Here is an example: Enter at close if the above formula is…
Three german researchers have written a study called Is Poker a Game of Skill or Chance? A Quasi-Experimental Study. I was made aware of this article in Peter Warrens’s blog (only in Norwegian). I totally agree with the content. Most traders have too much confidence and have too much ego. Overconfidence is a trader’s worst…
