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Today’s article is the fifth installment of the Trend Composite strategy. The series was put on hold because of recent events and market volatility, but continues today and will complete before the end of the month. Today’s installment uses the highly curated All Weather ETF List, which covers most assets and has minimal overlap.
Today we put the individual trend-following indicators in the Trend Composite to the test and compare performance against the Trend Composite itself. These are “All Signals” tests that give us an idea of trade frequency (number of trades), Win Rate, Average Gain and Average Loss. We will also look at three other performance
In an ideal world, trends would be consistent and persist for months. An ideal uptrend would march higher by consistently recording higher highs and higher lows. Once reversed, a downtrend would take over and work its way lower with lower lows and lower highs. There are plenty of chart examples for these consistence and persistent trends.
This article will dive into trend following. We will start by going over some key assumptions and expectations to consider when implementing a trend-following strategy. What are realistic Win Rates and Profit/Loss ratios? Attention then turns to selecting a timeframe suitable to trend-following. I will then explain 10 trend-following indicators
Seasonality takes a back seat to price action when it comes to analysis and signals, but seasonal patterns can provide a tailwind to existing trends or fresh signals. This report will look at the best and worst six months, break down the monthly numbers and analyze trends in the equity curves. May is here and June-July are around the corner so we will focus on these three months.
The turn of the month shows a strong bullish bias with an extremely stable equity curve that really took off the last few years. This strategy, which is only invested 38% of the time, outperformed buy and hold with a higher Compound Annual Return. Overall, the eight day percentage change at the turn of the month is positive 68% of the time for SPY. Despite strong numbers overall, February is weakest month when testing over the last twenty years, and we just happen to be in February.
There is a new ETF in town that promises big potential. The Invesco Next Generation Nasdaq 100 ETF (QQQJ) is based on an index with the same name. As the Invesco web site explains, 90% of its total assets will come from the underlying index and this index is based on the 101st to 200th largest stocks in the Nasdaq. This makes it a small and mid cap version of the Nasdaq 100. The ETF is
2021 is just around the corner and chartists without a strategy should think long and hard about getting one. Trading in the direction of the trend is pretty much my bread and butter strategy. I do not fish for bottoms or attempt to pick tops. Tempting as it often is, I try to refrain from such endeavors as much as possible. More often than not, we are better off using trend-following indicators to identify bullish and bearish trend reversals