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Leforrt3000
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This post is gonna cover some trading strategies, largely based off some forms of technical analysis, that I've come across that are promoted by multiple studies. This post does not have to do with GME or any of the other Wall Street Bets meme stocks on reddit.
If you want a place to go after reading this stuff to learn more about stocks, I'd recommend r/stocks as some sort of resource as I've gotten some other decent trading strategies from reading there over the course of several months.
As for the studies, I made sure to get the ones that are based off the NYSE or at worst some Western European stock exch. There are a lot of studies from 2nd and 3rd world countries and I doubt those are very good indicators for the US stock exchange.
1) First thing Im gonna cover is momentum trading. Momentum trading basically states that if a stock was doing well during a certain time period from the past, it'll give that stock a higher chance of doing well now.
Here's an article that gives an introduction into it and the original study that showed its worth: https://anderson-review.ucla.edu/momentum/
However, here are more recent and thus probably a more relevant scientific papers with more in depth results:
Study one: http://amarginofsafety.com/wp-conte...Working-Paper-on-10-Momentum-Myths-5-9-14.pdf
- From Myth 1: UMD, or “up minus down”, represents a portfolio thatis long stocks that have high relativepast one-year returns and short stocksthat have low relative past one-year returns. These have good returns overall except in bear markets.
- Momentum is somewhat relative to size, better with lower cap stocks in myth #3, multiple studies cited
- Momentum may be better measured by 7 months to 1 year ago as opposed to the past 6 months as per one study, myth 9
Study two: https://digitalcommons.butler.edu/c...&httpsredir=1&article=1260&context=cob_papers
- This study essentially formed portfolios with the top 1-50 highest returning stocks within the last 6 months, then they were held for a year.
- Portfolios with stocks in the top 7 rankings did best
- momentum trading does worse during recessions here again
2) Now here are a few more studies going over some tech analysis:
- https://docplayer.net/101034498-The...ll-signals-macd-aroon-rsi-so-obv-and-adl.html
- This chose only dow stock from a recent two year period
- Results: RSI 14 had the best results, the triggers were to buy at a rsi of 30 and sell at 70
- Others with decent results:
MACD with OBV , MACD with ADL not as good, Aroon with OBv best out of these other stocks, Aroon with adl
- MACD: Using the standard time period lags, the MACD is the difference between its “fast” 12-day EMA and its “slow” 26-day EMA. A bullish (buy) signal is given when the MACD crosses above a “trigger” value whichis the 9-day EMA of the MACD.
- Negative aroon is considered a sing a downtrend coming soon, positive is opposite
- Falling OBV means lower volume and a sell signal, rising is a buy signal (esp if prices are rising or flat *addition from stockchart, opposite for a falling obv); start from day -14 to 0 finding cumulative
- ADL: The signal is if a security's price is in a downtrend while the accumulation/distribution line is in an uptrend, the indicator shows there may be buying pressure and the security's price may reverse to the upside (got this from an outside source).
- More RSI proof from this study: https://www.researchgate.net/publication/23546661_Technical_analysis_an
d_the_London_stock_exchange_Testing_the_MACD_and_RSI_rules_using_the_FT30
- Solid study for other technical indicators: https://www.researchgate.net/public...nology_Companies_The_Evidence_of_FAANG_Stocks
- This study covered multiple indicators for the FAANG stocks
- The intro Reviews multiple studies, rsi consistently works decently well for dow and high stock market cap in literature review
- Results:
- MACD: According to the study, poor performance by itself
- RSI did slightly worse than buying and holding overall, only better than MACD
- Ichimoku: Positive for the literature review, Also positive in this study: https://www.researchgate.net/public..._PRICES_BE_PREDICTED_USING_THE_ICHIMOKU_CLOUD
This study appears to have less convincing results: https://www.researchgate.net/public...trading_rules_in_stock_markets_and_FX_markets
- Ichimiku had very good results in this study. 5 lines trading with it did the best, but had a low occurence rate. Chi vs Pi did not have that good of a positive trade success rate, but consistently had the overall hightest positive net gains.
3) Websites that can be used to help
- Finviz: I use finviz as a stock screener for RSI, I screen by stocks with a high market cap. Go to the technical subheading and rsi's there and you screen using that. I havent looked for a screener for the other decent indicators in the "six popular trading indicators" study, this might work for that though
- As for ichimoku, I have yet to find stuff that works solidly for it as a stock screener, but here are some sites that could work partially:
https://www.ichimokutrader.com/elements.html
- For specific stocks
- These give a good layout of what you want to do in regards to equations, but they dont pick from relevant exchanges so its useless otherwise
chartink.com
chartink.com
- Cant figure out to get the trading view screener to work:
www.tradingview.com
- This may be the best one: https://www.stockfetcher.com/forums/Filter-Exchange/Chikou-Span-line/93472
www.stockfetcher.com
If you want a place to go after reading this stuff to learn more about stocks, I'd recommend r/stocks as some sort of resource as I've gotten some other decent trading strategies from reading there over the course of several months.
As for the studies, I made sure to get the ones that are based off the NYSE or at worst some Western European stock exch. There are a lot of studies from 2nd and 3rd world countries and I doubt those are very good indicators for the US stock exchange.
1) First thing Im gonna cover is momentum trading. Momentum trading basically states that if a stock was doing well during a certain time period from the past, it'll give that stock a higher chance of doing well now.
Here's an article that gives an introduction into it and the original study that showed its worth: https://anderson-review.ucla.edu/momentum/
However, here are more recent and thus probably a more relevant scientific papers with more in depth results:
Study one: http://amarginofsafety.com/wp-conte...Working-Paper-on-10-Momentum-Myths-5-9-14.pdf
- From Myth 1: UMD, or “up minus down”, represents a portfolio thatis long stocks that have high relativepast one-year returns and short stocksthat have low relative past one-year returns. These have good returns overall except in bear markets.
- Momentum is somewhat relative to size, better with lower cap stocks in myth #3, multiple studies cited
- Momentum may be better measured by 7 months to 1 year ago as opposed to the past 6 months as per one study, myth 9
Study two: https://digitalcommons.butler.edu/c...&httpsredir=1&article=1260&context=cob_papers
- This study essentially formed portfolios with the top 1-50 highest returning stocks within the last 6 months, then they were held for a year.
- Portfolios with stocks in the top 7 rankings did best
- momentum trading does worse during recessions here again
2) Now here are a few more studies going over some tech analysis:
- https://docplayer.net/101034498-The...ll-signals-macd-aroon-rsi-so-obv-and-adl.html
- This chose only dow stock from a recent two year period
- Results: RSI 14 had the best results, the triggers were to buy at a rsi of 30 and sell at 70
- Others with decent results:
MACD with OBV , MACD with ADL not as good, Aroon with OBv best out of these other stocks, Aroon with adl
- MACD: Using the standard time period lags, the MACD is the difference between its “fast” 12-day EMA and its “slow” 26-day EMA. A bullish (buy) signal is given when the MACD crosses above a “trigger” value whichis the 9-day EMA of the MACD.
- Negative aroon is considered a sing a downtrend coming soon, positive is opposite
- Falling OBV means lower volume and a sell signal, rising is a buy signal (esp if prices are rising or flat *addition from stockchart, opposite for a falling obv); start from day -14 to 0 finding cumulative
- ADL: The signal is if a security's price is in a downtrend while the accumulation/distribution line is in an uptrend, the indicator shows there may be buying pressure and the security's price may reverse to the upside (got this from an outside source).
- More RSI proof from this study: https://www.researchgate.net/publication/23546661_Technical_analysis_an
d_the_London_stock_exchange_Testing_the_MACD_and_RSI_rules_using_the_FT30
- Solid study for other technical indicators: https://www.researchgate.net/public...nology_Companies_The_Evidence_of_FAANG_Stocks
- This study covered multiple indicators for the FAANG stocks
- The intro Reviews multiple studies, rsi consistently works decently well for dow and high stock market cap in literature review
- Results:
- MACD: According to the study, poor performance by itself
- RSI did slightly worse than buying and holding overall, only better than MACD
- Ichimoku: Positive for the literature review, Also positive in this study: https://www.researchgate.net/public..._PRICES_BE_PREDICTED_USING_THE_ICHIMOKU_CLOUD
This study appears to have less convincing results: https://www.researchgate.net/public...trading_rules_in_stock_markets_and_FX_markets
- Ichimiku had very good results in this study. 5 lines trading with it did the best, but had a low occurence rate. Chi vs Pi did not have that good of a positive trade success rate, but consistently had the overall hightest positive net gains.
3) Websites that can be used to help
- Finviz: I use finviz as a stock screener for RSI, I screen by stocks with a high market cap. Go to the technical subheading and rsi's there and you screen using that. I havent looked for a screener for the other decent indicators in the "six popular trading indicators" study, this might work for that though
- As for ichimoku, I have yet to find stuff that works solidly for it as a stock screener, but here are some sites that could work partially:
https://www.ichimokutrader.com/elements.html
- For specific stocks
- These give a good layout of what you want to do in regards to equations, but they dont pick from relevant exchanges so its useless otherwise
BULL Chikou Span Cross, Technical Analysis Scanner
BULL Chikou Span Cross Technical & Fundamental stock screener, scan stocks based on rsi, pe, macd, breakouts, divergence, growth, book vlaue, market cap, dividend yield etc.
Daily ichimoku bullish, Technical Analysis Scanner
daily ichimoku bullish crossover above cloud. Technical & Fundamental stock screener, scan stocks based on rsi, pe, macd, breakouts, divergence, growth, book vlaue, market cap, dividend yield etc.
- Cant figure out to get the trading view screener to work:
Stock Screener: Search and Filter Stocks
Use the Stock Screener to scan and filter instruments based on market cap, dividend yield, volume to find top gainers, most volatile stocks and their all-time highs.
- This may be the best one: https://www.stockfetcher.com/forums/Filter-Exchange/Chikou-Span-line/93472
StockFetcher
www.stockfetcher.com
