What are Market Timing Strategies? Plenty of investors try to time the market. Most are unsuccessful due to a number of reasons. Thus, most investors should not time the market. However, most of the failures can be attributed to a few reasons. In this article, we look at some elements that we believe are required…
SPY is the ETF for S&P 500 and GLD is the ETF for the gold price. Michael A. Gayed, CFA, presented a SPY/GLD rotation strategy on ritholtz.com in July 2011. SPY is the ETF for S&P 500 and GLD is the ETF for the gold price. Michael A. Gayed has been a portfolio manager for…
Many traders fear a bear market would be really bad for their trading. Is this true? Should you trade during a recession? What does the data say? There are ways to exploit a bear market during a recession. A big part of that is understanding how the market behaves. We have in multiple other articles…
Mean reversion trading strategies are still working very well in the stock market, at least in the main indices and the majority of the sectors. Back in 2013, we published a backtest that looked at the performance of S&P 500 (SPY) when both Thursday and Friday were down days. This was one of the first…
ChatGPT has been on everyone’s mind lately. People are discussing how it can improve productivity or help you solve programming bugs. But can ChatGPT be used for backtesting? ChatGPT can be helpful in trading as a tool for analyzing market data, generating trading ideas, and backtesting trading strategies. But it can be tricky to get…
For those who follow social media, you might be aware of the following ratio that has been much discussed lately: Nasdaq100 and Bonds. QQQ/TLT This is the ticker code of the ETFs of Nasdaq 100 (QQQ) and 20(+)-year Treasury Bonds (TLT). The reason for the interest in the ratio is the divergence between the two…
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 that are expected to appreciate and, at the same time, takes short positions in stocks…
In this article, we will implement a trading strategy that will combine a Relative Strength Indicator and a Simple Moving Average. Let’s call it an RSI and moving average trading strategy. We explain the strategy and code it in Python. What is the idea behind the strategy? That is to have both indicators that confirm…
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): Today’s close is a 5-day low of the low. Results Trading performance if exit after N-days (SPY since inception in 1993): The results are pretty good. If…
Asset allocation is the allocation of investments across different classes of assets. In a broad sense, this means a combination of stocks, bonds, various securities and money market instruments. Within these classes, subclasses are also distinguished: Asset allocation strategy (strategies) We have provided several examples of backtested asset allocation strategies. Please click the link below:…
