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High volatility in investment returns can eventually lead to uncle point or even ruin. Long-term backtests or even actual records may look good on paper but returns of market participants depend on timing of investment. No one is investing in a ...

Long-term forecasts are mostly irrelevant even if they turn out to be right because markets do not move on straight line paths. This holds for the forecast made in a book in 1999 that Dow would reach 36000. What counts ...

If there are data available to allow longer backtests but are not used, this could be the result of a dangerous and potentially misleading practice known as “data fishing.” Below is a specific example based on a popular momentum strategy ...

If you don’t understand something, don’t short it. Chances are high you don’t understand it anyway, especially if you aren’t a key player in the market or it’s a derivative of some kind. Tesla stock (TSLA) achieved a trillion dollar capitalization ...

Bitcoin returns are not serially correlated as some traders think. More importantly, serial correlation and direction of the trend are not directly related. I used bitcoin continuous BTC futures prices from Norgate data because of the well-defined trading hours (Sunday – ...

Long/short with extreme overbought/oversold equities has the potential of generating high returns because of large moves due to rebounds and corrections. This article outlines the process of generating long/short signals for equities with extreme overbought/oversold conditions. There are two basic steps ...

Retail traders have a significant advantage over small to medium size funds: they have more freedom to adjust risk and trade a wide variety of strategies and products. This is an edge provided traders do their homework. Below is what I ...

Timeframe impacts participants’ perception of market dynamics. SPY ETF charts in daily, monthly, quarterly and yearly time frames. Daily: “Oh… market is falling.” Monthly: “Um… just a down month.” Quarterly: “Well… this is still strong market.” Yearly: “Hooray… this is strong bull market.” Disclaimer:  No part of ...

This is a simple mean-reversion strategy for trading a portfolio consisting of SPY, QQQ and TLT ETFs based on price breakouts.

Although mean-reversion in daily stock market returns has waned significantly since reaching extreme levels late last year, it’s still high enough to cause losses to short-term bears. The market doesn’t like bears. Last week I wrote that mean-reversion in daily stock ...