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The belief that recent volatility in the forex market is high is not true by historical standards and is probably the result of recency bias. On Friday, September 23, 2022, the British Pound fell 3.6% against the US dollar, an equivalent ...

Due to large losses, investors are dissatisfied with the performance of the 60/40 allocation in stocks and bonds this year. Although this is understandable, as we show below, the losses are within historical extreme levels. The losses also depend on ...

Successful identification of outliers in market price action is important for trader profitability. After an introduction to the challenges of identifying anomalies and outliers, we discuss a process that applies to short-term trading. Last updated on 09/16/2022. A market outlier is ...

Since July of this year, the SPY ETF is up 6.1%, with the regular trading hours gains at 9.2%, and a loss of 3.1% in overnight. Possible causes of this significant reversal of a multi-year trend are listed. The multi-year trend ...

Forecasting is far from enough for market success. Knowing who you are up against is far more important than being able to work with data and forecast market price moves. The idea of forecasting the future is intriguing. But for market ...

Strategy ETFs are gaining attention. Below are examples of strategy ETFs we track. In the Price Action Lab Report of this week, we introduce a section for strategy ETFs due to their growing use in diversification strategies. We plan to add ...

Simple momentum has outperformed asset rotation, both long-short and long-only. Despite the underperformance this year, simple momentum has limited complexity and could continue to outperform asset rotation in the future. Definitions for this article: Simple momentum: Long SPY if the price is ...

There are many risk management schemes with varying sophistication.  This article lists seven of these schemes, ranked by increasing complexity. There are two important parts to every successful trading and investment strategy: Timing Rules. Risk management. In this article, we focus on the risk ...

After a sharp rise from mid-April to mid-May of this year, stock market volatility is crashing. This has been historical a good sign for equities, except when it was not. The daily chart below shows the 21-day annualized volatility of the ...

Losing discipline and not following basic rules is more prevalent during a bear market and a slow “pain trade”. Using strategies to enforce discipline is not sufficient to escape the adverse effects of a slow “pain trade” and high volatility mixed ...