This is a clear-cut roadmap for practitioners who want to know how to design, test and optimize a trading strategy from start to finish.
Continue readingHow to develop, test and optimize a trading strategy – complete guide
Posts Tagged → Trading Strategies
Range Bound Trading Strategy
The following system helps you identify range bound formations and when to enter and exit such trades. Range bound formations occur when prices bounce back and forth establishing a nearly identical pattern of highs and lows.
Continue readingBuild a Trading System using Statistical Methods
The process of trading system design is a process of statistical based price prediction. In this post we will illustrate some basics that show if a certain event can give you the statistical edge to predict future price movements. Once you identify a predictive event it becomes much easier to design a trading system around it.
Continue readingDemystifying Bollinger Bands
Demystifying bollinger bands and why traders should always combine the Bollinger Bands with other technical indicators to improve market timing.
Continue readingMean Reversion Volatility Strategy
Ever wondered if you can design a profitable trading strategy by trading volatility ETFs ? Well, yes you can. Those ETFs are highly ineffective vehicles on a long term investment horizon. However short term strategies have shown to be a rewarding way to trade these ETFs. Before we move onto strategy design we have to choose two volatility ETFs for backtesting. We will backtest our strategies with VXX and XIV ETFs since they are the most widely traded ones and have enough trading volume to keep our slippage low and guarantee fast order execution.
Continue readingMean Reversion Trading System
The first step in building such a system is to define what mean reversion is. Mean reversion systems are looking for markets that are unusually high or low and will eventually return back to the mean. We want a system that looks at a particular market with a significant deviation from their average. Our previous research we did on opening range breakout systems already showed us that opening range breakouts define the trend for the rest of the day in about 30% of the time. Which means that out of 20 trading days we have 14 days of price patterns that are reverting back to the mean.
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