Introduction to Forex Trading: Forex trading, short for foreign exchange trading, is the practice of buying and selling currencies in the global financial market for financial gains. It is a decentralized marketplace where participants trade one currency for another, aiming to profit from fluctuations in exchange rates. Forex trading is significant due to its immense…
This article examines how the RSI indicator works and how to develop an RSI trading strategy. The Relative Strength Index (RSI) was developed by Welles Wilder and first introduced in a magazine called Commodities (now Futures) in June 1978. Wilder published a book in the same year called New Concepts In Technical Trading Systems (he…
Covered calls trading strategy looks 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…
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 strategy on four different US stock market indices to show the differences in returns and…
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 the comparison we created a portfolio with a maximum of 10 positions each and compared…
Market timing is not easy, and if you get it wrong, it might lead to poor compounding (in the long run). We did a backtest to show what happens when you: One backtest removed the ten best days from 1960 until today for S&P 500 (replaced with zero performance that day), and the other…
In this article, we make a backtest of a specific trading strategy and compare the results by using three different entries: Let’s start: Entry types Let’s look at the different options for when and how to enter a position: 1. Entry on the next day open Depending on when the buy or sell signal is…
Instrument/asset S&P 500 (SPY) Trading rules The trading rules of the edge read like this (please also backtest yourself – you might find a way to improve it): In N-days, there is a FOMC meeting. Results We have backtested the performance of SPY in the days before the meeting ends. We go long N-days before…
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 time to sell a position? How long should you wait until you sell? Let’s look…
We are strong believers in seasonal trading strategies, and one of the best seasonalities is specific trading days of the month. Most articles about seasonal trading refer to calendar days, but a much more accurate trading term is the trading day. The calendar and trading days can be completely different. So, what is the best…
