How to use moving average trading strategies are widely discussed and used in the media and likewise frequently used by analysts when making calls about the future. What is a moving average and can we find profitable moving average strategies on stocks? Do moving average strategies work? Backtests reveal that the most popular moving averages…
When stock markets are oversold, we can expect strong returns over the next few days. But in the long term, returns gravitate toward the average returns. Thus, oversold stock markets only predict short-term results, not long-term. We do a backtest to prove our point. When there is “blood in the street” the media takes interest…
We have been investing and trading for about 21 years, but not until now have we ever looked at a pivot points trading strategy. We can read a lot about pivot points in certain media magazines and by stock commentators but have seen very little backtesting of any pivot point strategies. Below you find six…
What are the Donchian Channels and do they work on stocks? The Donchian Channels were invented by Richard Donchian decades ago. They are still a popular tool for traders, but the markets have changed a lot since Donchian’s invention. The Donchian Channels (or bands) are formed by two bands: an upper band based on the…
Exponential moving average strategy and backtest The exponential moving average is one of the most commonly used among traders. But do you know what it is? And do you know if an exponential average strategy can be used profitably in the stock market? Backtests indicate that exponential moving averages do work: They can be useful…
Simple moving average strategy backtestsMoving averages are one of the most commonly used indicators in technical analysis, and the simple moving average is the easiest one to construct. Do you know what it is? Can you make profitable simple moving average strategies in the markets? Backtests indicate that you can use simple moving averages for…
When stock markets are overbought, we can expect weaker returns than average over the next few days. But in the long term, returns gravitate toward the average returns. Thus, overbought stock markets only predict short-term results – not long-term. This article tries to answer what happens when stock markets are overbought. Overbought means that markets…
Volatility trading strategies can be very profitable. As an example, we show you an equity curve that only trades when volatility is above what is “normal”. We use a 200-day moving average as a filter for when we want to enter a trade. Because the volatility picks up when investors are “panicking”, we only look…
TLT vs SPY – Bond Rotation Strategy. Some days ago we published an ETF rotation strategy that rotates between SPY, TLT, and EEM based on monthly momentum. Today we look at a similar ETF sector momentum/rotation strategy but we exclude EEM: A SPY and TLT strategy (S&P 500 and 20 years Treasury bond). The SPY…
Jack Bogle’s famous advice was to avoid searching for individual stocks, sectors, or markets that may perform better and simply invest in the entire market. This means using index funds to build a diversified portfolio. The Bogleheads 3 Fund Portfolio (global stocks, U.S. bonds) and Bogleheads 4 Fund Portfolio (global stocks, global bonds) are good…
