A stock market anomaly is a way to beat the market.
It’s a rate of return or investment strategy that seems to defy the efficient market hypothesis.
Today, most investors agree that markets are fairly efficient even if they don’t believe in the purest form of market efficiency.
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This post contains a detailed guide for creating a mean reversion trading strategy.
You will learn what mean reversion is, how to trade it, 10 steps for building a system and a complete example of a mean reversion system.
Let’s get going!
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It’s about time I updated my list of best trading books so here is my selection of the 100 greatest trading and investing books of all time.
I’ve read (or at least partly read) a lot of these and I’ve tried to put them in some sort of order as well. Not an easy task but see what you think.
If you have any suggestions for other trading books, please leave them in the comments. You can never have too many book recommendations. Read more »
Because financial matters are rarely covered during high school, many people don’t understand the stock market or how to invest their money properly.
This means that they are more vulnerable to investment scams. With the growth of the internet, and the current frothy state of global markets, these investment scams are unfortunately all too common.
So here are a list of 20 common traps that all traders and investors need to be aware of:
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Position sizing is an important topic but many investors don’t give it much thought.
In this article I will look at a method that uses the RSI indicator to size positions. This means we can buy more when the price is low and buy less when the price is high. Read more »
The benefits of having a profitable trading system are clear. Wealth generation, freedom, reduced stress. But there are problems too, which most system developers sweep under the carpet.
In this post we will look at some of the disadvantages associated with trading systems. Read more »
Debate has raged for years as to whether or not technical analysis is actually a useful tool in helping to generate long run profits in the markets.
For some, technical analysis is no more than hocus pocus. An approach that is based on faith rather than legitimate science. For others, technical analysis is the foundation of profitable trading and those that dismiss technical analysis are usually not ‘real’ traders. Read more »
Financial visualisation website FINVIZ.com is one of my favourite trading tools. I use it every day to keep a tab on markets and look at charts.
The stock screener on Finviz is also one of the best I’ve found with more than 60 filters that can be applied to 7000 US stocks.
In the rest of this article, I will take a simple stock screen from Finviz and backtest it on historical data using the backtesting platform Amibroker. This will give us an idea of what to expect if we were to pick stocks according to the screen. Read more »
After a period of some thirty years of increasing bond prices, and with the Federal Reserve committed to a policy of gradually increasing interest rates, the time for long-based trading strategies on US treasuries could well be coming to an end.
Many, including former Fed chairman Alan Greenspan, have called the bond market a bubble ready to pop. With this in mind, this article presents a simple trading strategy that shorts the US ten year note using the ATR (average true range) indicator.
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The 200 day moving average is an extremely popular indicator among traders and trend followers. When a stock is above the 200 day MA, it’s said to be in an uptrend and when it’s below, it’s said to be in a downtrend.
In this article I look at a strategy that buys upward trending stocks as they pull back towards the 200 day moving average line. I test the signal on S&P 500 stocks back to 2000 but I find no real edge to this signal on it’s own. Read more »