Whatever your opinions are about the concept of back-testing, there are few better ways to build a trading system than through the back-testing of historical data.
Back-testing allows us to answer critical questions like ‘how many positions should I hold in a portfolio?’, ‘how much risk should I take?’ or ‘how effective was this strategy in the past?’ Read more »
Trading systems are not only good for making money in financial markets but they are also extremely useful for learning. Unfortunately, trading systems often get discarded early on after a couple of poor back-test results.
Sometimes it is better to improve an existing model that needs work than to start afresh with a totally new system. In this article I look at 21 ways you might be able to improve on your existing trading system: Read more »
My goal is to bring new trading strategies to the table every month. Last month, I brought you details about building a trading robot with Excel and Interactive Brokers and this month I’m back with another excellent strategy from Peter Titus called The Big Volatility Short.
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In this article I present a simple and quick trading strategy for shorting leveraged ETFs.
Using historical data from Norgate and the back-testing program from Amibroker I reveal a potentially profitable strategy that could benefit from further development. Read more »
It has long been established that the Kelly Formula provides a powerful equation for calculating the optimum level of risk with which to place a bet in a probabilistic type game. A game like blackjack or sports betting. Read more »
The benefits of creating an automated trading system are huge. With a profitable trading robot you can spend more time doing what you enjoy and less time watching screens. You can trade quicker, smarter and without emotion. Read more »
If stock picking was as simple as ticking off a few boxes it would be too easy.
However, in the book Thinking Fast and Slow, Nobel Prize winner Daniel Kahneman suggests that simple checklists and algorithms are often more effective than complex models. Read more »
In this article I look at the advantages of a barbell trading strategy and then I put the strategy to the test using historical stock data. As you will see there are some pros and cons to using this technique.
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Conventional wisdom suggests that a reverse stock split is generally bad for a company’s stock. That’s because reverse splits are usually undertaken when a stock is in danger of being delisted.
But is there any actual evidence that reverse stock splits lead to bad investment returns? And if there is, might you be able to make money from shorting reverse split stocks? Read more »
What matters most to history are not the steady trends but the unexpected shocks that change the world the moment they occur. Such events are inherently unpredictable even though they always seem explainable after the fact. Read more »