loyolaxavvierretard
π―ππ― ππππ . Alonso
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NOTE - THIS IS FOR THOSE WHO ARE WILLING TO TAKE THIS SERIOUSLY. YOU WILL NEED QUITE A FEW TOOLS TO GET STARTED FIRST, NAMELY A COMPUTER AND KNOWLEDGE OF PYTHON SCRIPTS AND HOW TO USE PANDAS. A USER CALLED JASON VOORHEES HAS MADE A RUDIMENTARY GUIDE SO FOLLOW THAT FIRST. TRADING ALSO CARRIES HEAVY RISK SO ONLY DO IT IF YOU ARE WILLING TO TRADE HUGE CAPITAL AND HAVE THE MONEY TO LOSE. THE SIMPLE WAY IS TO INVEST
1. Gap and Go Strategy (Intraday only)
Overview - This strategy is for stocks that gap up due to news or earnings and continue trending during the market hours.
How to identify - a. It is up 3-10% from previous day's close. (close means when the stock stopped trading)
b. High pre-market volume (shown in your trading app. The trading volume should be compared against other companies in the sector and also the average trading volume)
c. Stocks with low float fit this criteria more often than not
d. Enter the stock when it breaks it's "5-minute high" (very imp)
When to exit - a. Partially when it hits resistance levels. In simpler words exit partially when the stock is struggling to rise more
b. Fully exit before closing, remember this is intraday only.
Backtest -a. Win rate = 55-65%
b. Avg gain = 2-4%
c. Avg loss = 1.5-2%
d. Best day to enter = Monday and Tuesday (because news and volume peak here)
Risks - You may invest into a bull trap.This means that the stock will boom in pre market but reverse sharply. High volatility for intraday trading and slipping of the stock. This strategy is relatively simple so it can result in overcrowded trades resulting in algos and market makers fading. This means the stock never moves higher than pre- market high and the money movers take a position against the trend to result in a high risk high reward trade.
2. Short Term Swing (RSI-2 Mean Reversion Strategy)
Overview- RSI indicate the speed and momentum of stocks on a 0-100 scale. A stock having an RSI less than 2 will more than likely bounce back very heavily. For context an RSI below 30 means a stock is oversold and an RSI above 70 means a stock is overbought. An RSI of less than 2 is means the stock is likely to go on an upwards momentum.
How to identify - a. Stock has a moving average of above 200 days. It means that it is on an upward momentum with each crest and trough higher than the previous if the moving average is high.
b. RSI is less than 2
c. Optional - Stock closed below previous day's low.
When to enter - Buy at next day's open. Basically buy when the stock opens the day after you identify it.
When to exit - Exit when RSI is above 60. This means that the stock is tending towards being overbought. Alternatively, sell after 3-5 days.
Backtest (S&P100) - a. Win rate = 70%
b. Avg gain = 0.5-1% per trade
c. Avg loss = Data not obtained
Risk - Relying on mean reversion indicators means you will likely mistime your buys. This is because oversold or overbought stocks stay that way for a long time sometimes. Also minor fluctuations can generate false sell signals. Another problem is that indicators lag behind news and thus do not capture irrational behaviour accurately. Finally it has a low risk to return ratio and "past behavior does not predict future results" holds true for this strategy.
3. Post Earnings Drift (Short Term to Medium Term Swing)
Overview - Buy a stock when company beats earnings prediction and goes higher
How to identify - a. Beats Earnings per Share and revenue
b. The stock has a strong price reaction on high volume trades. Basically means that the stock is fluctuating signicficantly due to high market interest. We want it to have an upward movement obviously.
c. Optionally buy on volume spikes.
When to enter - A few days after earnings are beat on a small dip.
When to exit - After 5-10 days or after stock is near resistance levels (meaning explained above)
Backtest - a. Win rate = 65%
b. Avg return = 3-4%
c. Best sector to do it in = Tech (Blue Chip)
Risks - Market can have a delayed reaction so be aware of fake breakouts in price. Post earnings trading is full of rumors and analysis so volatility is very high, leading to stoplosses being triggered due to insane fluctuations. Your interpretations of the earnings report can be different from the market so be very thorough. Overcrowded setups can happen which can lead the algos to fade the move i.e. trade against the trend in a high risk high reward strategy.
4. Turnaround Tuesday
Overview - Exploit sharp reversals after Monday selloffs. Hence the name Tuesday. Mostly oversold stocks fit this.
How to identify - a. Only if stock/index is down more than 2%
b. When it enters oversold territory basically RSI below 30 or 20.
When to enter - Buy on Tuesday open.
When to close - Sell on Tuesday close or when the price recovers by 1-2%
Backtest - a. Win rate = 65%
b. Avg return = 0.5-1.2%
c. More reliable in bull markets
Risks - Just because Monday was weak does not mean Tuesday will bounce back. So reversal might not happen. Unexpected news can mean that you end up on the wrong side of trade. Rally coming on low volume are false moves and should not be meddled with. Can lead to fakeouts and choppy action, meaning volatile behavior.
5. 52-Week High Breakout Strategy
Overview - Rests on the logic that stocks that keep making highs will continue doing so because of institutional interest and trend.
How to identify - a. Price at or above 52 - Week high.
b. High relative volume. Means that a stock is being traded more than the average times it is traded.
c. Good fundamentals
When to enter - When it breaks out above 52-week high and with volume confirmed.
When to exit - Defined on gain. For example exit at 8-10% gain. Or you can trail stop based on ATR. Basically you stop a few price points away from the volatile fluctuation range. More info can be found on the Internet
Backtest - a. Win rate = 60%
b. Avg 1 month return - 2.5-3.2%
Risks - False breakouts aka fakeouts. If it reverses hard kiss your money goodbye. The stock can become overbought before it breaks out above it's 52-week high. Always check technical indicators before making a move. The support for this trading strategy is non existent since the stock is already rallying hard and it also does not have clear resistance levels so you are groping in the dark basically. Quite possibly the riskiest strategy.
If you want more please let me know.
I'll Get Straight To The Point. No Jokes. No memes. Only serious strategies for those who have the capital and the risk appetite
TLDR - Some trading strategies used by hedge funds to accumulate small returns. For special cases. I am reading a book right now, hence the post
1. Gap and Go Strategy (Intraday only)
Overview - This strategy is for stocks that gap up due to news or earnings and continue trending during the market hours.
How to identify - a. It is up 3-10% from previous day's close. (close means when the stock stopped trading)
b. High pre-market volume (shown in your trading app. The trading volume should be compared against other companies in the sector and also the average trading volume)
c. Stocks with low float fit this criteria more often than not
d. Enter the stock when it breaks it's "5-minute high" (very imp)
When to exit - a. Partially when it hits resistance levels. In simpler words exit partially when the stock is struggling to rise more
b. Fully exit before closing, remember this is intraday only.
Backtest -a. Win rate = 55-65%
b. Avg gain = 2-4%
c. Avg loss = 1.5-2%
d. Best day to enter = Monday and Tuesday (because news and volume peak here)
Risks - You may invest into a bull trap.This means that the stock will boom in pre market but reverse sharply. High volatility for intraday trading and slipping of the stock. This strategy is relatively simple so it can result in overcrowded trades resulting in algos and market makers fading. This means the stock never moves higher than pre- market high and the money movers take a position against the trend to result in a high risk high reward trade.
2. Short Term Swing (RSI-2 Mean Reversion Strategy)
Overview- RSI indicate the speed and momentum of stocks on a 0-100 scale. A stock having an RSI less than 2 will more than likely bounce back very heavily. For context an RSI below 30 means a stock is oversold and an RSI above 70 means a stock is overbought. An RSI of less than 2 is means the stock is likely to go on an upwards momentum.
How to identify - a. Stock has a moving average of above 200 days. It means that it is on an upward momentum with each crest and trough higher than the previous if the moving average is high.
b. RSI is less than 2
c. Optional - Stock closed below previous day's low.
When to enter - Buy at next day's open. Basically buy when the stock opens the day after you identify it.
When to exit - Exit when RSI is above 60. This means that the stock is tending towards being overbought. Alternatively, sell after 3-5 days.
Backtest (S&P100) - a. Win rate = 70%
b. Avg gain = 0.5-1% per trade
c. Avg loss = Data not obtained
Risk - Relying on mean reversion indicators means you will likely mistime your buys. This is because oversold or overbought stocks stay that way for a long time sometimes. Also minor fluctuations can generate false sell signals. Another problem is that indicators lag behind news and thus do not capture irrational behaviour accurately. Finally it has a low risk to return ratio and "past behavior does not predict future results" holds true for this strategy.
3. Post Earnings Drift (Short Term to Medium Term Swing)
Overview - Buy a stock when company beats earnings prediction and goes higher
How to identify - a. Beats Earnings per Share and revenue
b. The stock has a strong price reaction on high volume trades. Basically means that the stock is fluctuating signicficantly due to high market interest. We want it to have an upward movement obviously.
c. Optionally buy on volume spikes.
When to enter - A few days after earnings are beat on a small dip.
When to exit - After 5-10 days or after stock is near resistance levels (meaning explained above)
Backtest - a. Win rate = 65%
b. Avg return = 3-4%
c. Best sector to do it in = Tech (Blue Chip)
Risks - Market can have a delayed reaction so be aware of fake breakouts in price. Post earnings trading is full of rumors and analysis so volatility is very high, leading to stoplosses being triggered due to insane fluctuations. Your interpretations of the earnings report can be different from the market so be very thorough. Overcrowded setups can happen which can lead the algos to fade the move i.e. trade against the trend in a high risk high reward strategy.
4. Turnaround Tuesday
Overview - Exploit sharp reversals after Monday selloffs. Hence the name Tuesday. Mostly oversold stocks fit this.
How to identify - a. Only if stock/index is down more than 2%
b. When it enters oversold territory basically RSI below 30 or 20.
When to enter - Buy on Tuesday open.
When to close - Sell on Tuesday close or when the price recovers by 1-2%
Backtest - a. Win rate = 65%
b. Avg return = 0.5-1.2%
c. More reliable in bull markets
Risks - Just because Monday was weak does not mean Tuesday will bounce back. So reversal might not happen. Unexpected news can mean that you end up on the wrong side of trade. Rally coming on low volume are false moves and should not be meddled with. Can lead to fakeouts and choppy action, meaning volatile behavior.
5. 52-Week High Breakout Strategy
Overview - Rests on the logic that stocks that keep making highs will continue doing so because of institutional interest and trend.
How to identify - a. Price at or above 52 - Week high.
b. High relative volume. Means that a stock is being traded more than the average times it is traded.
c. Good fundamentals
When to enter - When it breaks out above 52-week high and with volume confirmed.
When to exit - Defined on gain. For example exit at 8-10% gain. Or you can trail stop based on ATR. Basically you stop a few price points away from the volatile fluctuation range. More info can be found on the Internet
Backtest - a. Win rate = 60%
b. Avg 1 month return - 2.5-3.2%
Risks - False breakouts aka fakeouts. If it reverses hard kiss your money goodbye. The stock can become overbought before it breaks out above it's 52-week high. Always check technical indicators before making a move. The support for this trading strategy is non existent since the stock is already rallying hard and it also does not have clear resistance levels so you are groping in the dark basically. Quite possibly the riskiest strategy.
If you want more please let me know.
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