Strategies & Setups

System Traders: The Noise Test and Lying Backtests

Can you trust a backtest? Below is a simple strategy that uses intermarket signals from the Japanese Yen to trade US 30 Year Bond Futures. It only has 2 rules for entry. The strategy produces fairly stable in-sample returns especially for being so simple. The in sample period is from…

Combining Trading Rules To Smooth Performance

The market is “overbought” or “oversold” are common phrases you will hear across the finance space. However, it is actually extremely rare for these conditions to be true. Today, we’ll attempt to show how trading rules can provide a better picture of the market while enhancing trading performance. First, let’s…

How Traders Can Profit Off Volume Spikes

This post was written with Derek Benedet of Richardson GMP. A common saying for investors is that volume tends to lead price. By volume, we mean the number of shares traded from one owner to another in a single day. High volume days are evidence that an increased number of…

Using Conditional Probabilities To Gain A Trading Edge

Much of trading can be broken down as conditional probabilities. And there’s a distinct benefit in understanding what is likely to happen if some condition (or set of conditions) is true or not. For example, is tomorrow more or less likely to close higher if we are above the 200 day moving average…

What Major Stock Market Tops Look Like

Stock Market: Markets Don’t Peak Quietly   Over the past few weeks in my newsletter, “On The Mark,” I discussed some things that generally occur at major stock market tops. Here is a brief synopsis. Major stock market tops are generally accompanied by lengthy divergences with respect to market internals and longer-term…

Tracking Sigma Scores Of Price Changes For Regime Shifts

Measuring price moves is the name of the game. However, measuring price moves given recent context can add additional benefits to your trading performance. At times, the market can get very quiet which can make a 1% price drop feel like a 10% price drop (think summer trading). At other…

3 Simple Ways To Reduce The Risk Of Curve-fitting

Curve-fitting is almost certain death for a trading or investment strategy. So, what is curve-fitting? Well, you know when you test a trading or investment hypothesis, fall in love with the historical results, and then the idea fails to generate similar (or even positive) returns once you decide to trade…

Investors: How To Play The Game To Win

What Rick Barry and the Atlanta Falcons can teach us about risk management “Something about the crowd transforms the way you think” – Malcolm Gladwell – Revisionist History With 4:45 remaining in Super Bowl LI, Matt Ryan, the Atlanta Falcons quarterback, threw a pass to Julio Jones who made an…

What Do All Great Traders Have In Common?

Many people with various diverse backgrounds come into the market to try and make money every single day. With these traders is an almost limitless array of strategies for finding an edge. And amid all these different approaches, one thing stands out as the common denominator. Do you have a…