The idea behind dollar cost averaging is simple. Every month invest a set amount of money into the stock market. When the market is high, you’ll be able to afford fewer shares and when it’s low you’ll be able to buy more shares at a lower price. Over time, the stock market moves up, your […]
The uptick rule is a short selling restriction that says you can only short sell a stock on an uptick. In other words, you must wait for a stock to trade a tick higher before you can short it. This rule was first introduced in 1938 to promote market stability and investor confidence. However, the […]
The VWAP trading strategy is an increasingly common trading strategy among day traders. Some intraday stock traders say that if they could choose only one technical indicator it would be the VWAP indicator. VWAP is not necessarily a holy grail but it is a useful indicator. Plus, many institutional traders use this indicator to break […]
This week we have seen a mini crash in the stock market indexes and an implosion of several short volatility ETNs. Mood in the stock market has quickly turned from exuberance to fear while some investors are ready to ‘buy the dip’. Conventional wisdom suggests that the best time to buy stocks is when there is […]
Last week the guys at Quantifiable Edges presented an interesting trading edge which buys one day pullbacks in the S&P 500 during strong up trends. The exact rules are described as follows:
Back in January 2017, Donald Trump had just become President and most pundits were forecasting a year of stock market volatility and interest rate hikes. As it turned out (despite terrorist attacks, natural disasters and provocative tweets) 2017 finished as one of the least volatile years in history.
This month, another new trading strategy called Nuggets Of Gold has been included in our research program Marwood Research. This is a daily, long/short strategy composed of simple rules that is designed to find short-term swing trades.
30-years ago it was considered irresponsible to use a market timing strategy to try and outperform the S&P 500. In recent years as investors have started to gain increased levels of access to historical data and the tools to develop effective trading models, it might now be considered irresponsible to not use a market timing […]
When times are good the economy is strong and everyone has more money to spend. So is there any relationship between consumer spending and the stock market? A new research paper suggests there is and provides a novel way of measuring consumer spending on a daily basis. Instead of looking at more traditional measures (such […]
Some investors focus on momentum stocks. Some look for value. Contrarian traders search out for the most hated or worst performing stocks. Recently, I came across the following graphic from Bloomberg which shows the 2017 performance of the 10 most shorted stocks in Asia:
Position sizing is an important topic but many investors don’t give it much thought. In this article I look at how to use the RSI indicator to dynamically size positions. This offers a simple way to buy more when the price is low and buy less when the price is high. Simple RSI-2 Trading Strategy […]
I have recently been looking at some old materials and I came across another interesting work by Larry Connors and Cesar Alvarez regarding Bollinger Bands. Bollinger Bands were developed by John Bollinger and can be used in a number of different ways. In this article, we will use Bollinger Bands to find mean reversion trades.
The focus of this article is a new study by Caporale and Plastun. They suggest that there’s an edge to be had in forex markets by trading gaps. However, they could not find an edge in other assets. Following are some of the findings from the research paper and then some concerns we have about […]
The world of social media has evolved rapidly in recent years. Traders and investors widely use various platforms both as a means of getting access to news and for trading ideas. Using social media as a trading indicator isn’t a new concept and the sentiment of tweets from Twitter has previously been shown to lead […]
Longer term readers and members will know that I try to keep Marwood Research updated with new trading strategies and information on a monthly basis. This month we have added a brand new trading strategy to the program called Trading For Yield.
In this article I look at some interesting new research from Haoyu Xu that can be useful for both momentum investors and reversal traders. The research finds that morning returns positively predict next month returns (momentum) while afternoon returns negatively predict next month returns (reversals).