What Is Trend Following? If you look at a selection of charts, it becomes obvious that prices tend to move in particular directions – either up or down – for extended periods of time. Often, there’s no obvious reason why this is occurring but it is. These are trends, and successful traders generate significant profits […]
Strategies/ Systems
How To Learn Amibroker In Under An Hour
In this article the aim is to learn Amibroker in under a hour. This is not a comprehensive tutorial but it covers all the features I find most important for trading. If you’ve never head of it, Amibroker is a powerful tool for technical analysis and backtesting. The software lets you scan, plot charts and […]
Which Trailing Stop Is The Best?
A trailing stop is a stop loss order that moves with the stock price. As the stock price rises, the stop moves higher too, locking in profit and reducing the risk of a loss. For example, suppose you buy Apple at $100 and enter a $20 trailing stop. When Apple moves to $120, your stop […]
Sentiment Analysis For Trading – Does It Work?
The last few months we have seen a surge in traders looking at forums such as Wall Street Bets trying to identify meme stocks and the next GameStop. This type of trading could be classed as sentiment analysis trading. Investors attempt to make money in stocks by assessing what other investors are talking about. Sentiment […]
Analysis Of Entry Signals
I have just published a new class called Analysis Of Entry Signals. This is a 1-hour class where I take 40 different trading signals and analyse their profit potential on US stocks over different time horizons, spanning 2-days to two years. The idea behind this class is to analyse a large amount of historical data […]
How To Invest With Intelligent Machines – Lessons From Garry Kasparov
I’ve been reading the book Deep Thinking by Garry Kasparov. Kasparov is one of the greatest chess players of all time. He ranked number one from 1984 until his retirement in 2005, obtaining a peak rating of 2851. Kasparov is also remembered as the first world champion to lose a match against a computer, IBM’s […]
Trend Following With ETFs and Large Cap Stocks
I was browsing Quantpedia and came across an investment strategy called Asset Class Trend Following, originally credited to Meb Faber. The strategy is very simple so I decided to run a couple of quick backtests and see if I could find anything interesting. Asset Class Trend Following Rules The rules are straightforward… “Using an investment […]
Should You Trade This Earnings Pullback Strategy?
I’ve written a few articles lately that look at the use of valuation metrics on investing strategies. Those articles prompted a reader to ask if I could test a strategy called the EV/EBITDA pullback. The idea behind this strategy is to buy a stock when the EV/EBITDA ratio deviates 30% or more below the historical […]
What Trading Signals Work Best For Long-Term Investors?
Simple technical analysis is of limited use to long-term investors. Momentum can last for a long time but it doesn’t have much predictive ability on a five or ten year time horizon. Likewise, indicators like moving averages or RSI are best suited for shorter-term trading. With that said, you don’t know until you test. So in […]
How To Use Stop Losses And Profit Targets
I started writing this post last week. The idea was to run a large-scale optimization to see which profit targets and stop losses work best when trading US stocks (similar to the article I wrote on trailing stops). I wanted to find out if it’s better to use a tight profit target or a loose […]
How To Trade Oversold Stocks (Waterfall Pattern)
In order to make a profit in stocks you need to sell at a higher price than you purchased. Because of this, many traders look for stocks that have dropped to extremely oversold levels in the hope that they will bounce back from their low levels. One such pattern traders look for is known as […]
Should You Buy Low Priced Stocks?
Some investors believe that lower price stocks produce better investment returns than higher priced stocks. It’s always tempting to look at stocks trading under $10 in the hope of finding a ten or twenty bagger. In some ways this makes sense. Higher priced stocks are often larger and more mature businesses that grow more slowly. Low […]
13 Reasons You Should Learn The Amibroker CBT
This week we published another new course to Marwood Research called Amibroker CBT Intensive. This class teaches you how to use the Amibroker custom backtester (CBT). The Amibroker CBT can be difficult to grasp at first but it offers the ability to take complete control of the backtesting process. In other words, you can create […]
Should You Buy 52-Week Low Stocks?
Whatever your investing style it’s useful to have a way to whittle down the thousands of available stocks to a more manageable number. Over the years, I’ve listened to many investors explain how they do it. Often, the first step is to look at the Wall Street Journal for stocks near 52-week lows or 52-week […]
5 Things You Learn From Backtesting Trading Strategies
When people talk about backtesting their minds often turn to formulas and equity curves. Some may even be drawn to data mining or curve fitting, things that can go wrong. But backtesting is not just a way to test the profitability of a trading signal. In fact, backtesting has taught me many important lessons about […]
Should You Invest In Dividend Aristocrats?
Dividend Aristocrats are stocks from the S&P 500 that have managed to increase their dividends for 25 consecutive years or more. They are typically large, blue-chip companies with a market cap of at least $3 billion. One example of a Dividend Aristocrat is Johnson & Johnson (JNJ) which has 57 years of consecutive dividend increases. […]
Testing Turnaround Tuesday
After a big move on a Monday you will often hear traders talk about turnaround Tuesday. The concept is very simple. When markets start the week in a big way, they will often settle down on Tuesday and put in a decent reversal. Looking at the data, we find that there is a small edge […]
Performance Of Our Trading Systems In 2019
One of the main reasons why I started Marwood Research is so I have a place to store all of my trading systems. Uploading them online means I can now look back and see how they have performed since they were published. Being able to evaluate the systems on new, unseen data is really important […]
January 2020 Review
Regular readers know that I started a project last year called Zero To A Million. The goal of this project is to prove that anyone can become a millionaire by investing a small amount into the stock market each month. It’s also to prove that you can invest in individual stocks and you don’t have to […]
10 Trading Strategies For A Bear Market
Interest rates are low, taxes are low and the stock market is firing on all cylinders. The current bull market is already the longest in history and just a few percent away from being the largest in history. But bull markets cannot last forever. Some time in the not too distant future a bear market […]
