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The most robust equity portfolio hedge is cash, but for this to work, it requires timing the market. However, it is not as complicated as opponents of market timing claim. Bonds are not a hedge. Those who needed proof that bonds are ...

As strange as it may seem, extreme macro calls are prevalent in the financial blogosphere and social media. These extreme calls cause volatility. Someone would think two rational macro analysts cannot have opposite but extreme views. For example, one macro analyst ...

As the number of markets increases, the Sharpe ratio of profitable trend-following strategies tends to increase due to decreasing volatility. Trading in many markets is essentially a Sharpe maximization strategy. Some trend-followers argue that trading many markets allows them to catch ...

Portfolio diversification aims to reduce the risk of investing in any particular asset. Trend-following aims to profit from outlier trades. If a trend-follower knew beforehand which markets would generate outliers, they would also know what to only trade. Since knowledge of ...

A trade outcome distribution with a positive skew could be the result of a naïve application of a stop-loss without any regard to the underlying price action dynamics. Naïve trading strategies worked well in the 1980s and 1990s before the advent ...

Chasing outlier trades in markets is quite appealing in theory but painful in reality, despite having gained traction in the last few years due to a rebound in trend-following CTA performance. Chasing outlier trades in markets involves taking small losses until ...

Below is a  brief account of what you can do with the two versions of DLPAL. The article was updated on August 10, 2023. Deep Learning Price Action Lab™ (DLPAL) is based on a proprietary algorithm that produces the same output ...

In trading or investing, reliance on a single strategy may result in extended periods of lackluster performance or, worse, underperformance. Traders and investors require the flexibility provided by a diverse portfolio of strategies. Buy and hold investing in the S&P 500 ...

Strategies fail when market regimes change. I include in this article an example of a popular trading strategy for trading NASDAQ-100 stocks with excellent backtest performance for 26 years before crashing. Trading NASDAQ-100 stocks with monthly rebalancing was a popular strategy ...

This is a strategy for trading the Dow 30 stocks and SPY ETF, with no parameters to optimize and no bear market filters. Updated: September 22, 2023 Since SPY ETF inception, the simple strategy has outperformed the annualized return by a ...