21 Year Study of SPY Reveals Consistent Income Trading System

I had heard there had been some stock market research that suggested that after the market sold off for a few days, it was likely to trade flat or bounce a few days later.

 

I thought that was pretty cool except that for some reason I could never find the research to see it with my own eyes.

 

So I decided to do the research myself and this article outlines some of my findings. My full report which includes how to actual trade the results of this study was way too long for your typical blog post so I wrapped it up in a free 43 page report. Sign up below and I'll send the the full PDF report to you titled 21 Year S&P 500 (SPY) Study Reveals High Probability Income Trading System.

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Combining Technical and Fundamental Analysis To Make 30% in 30 Days

Combining technical and fundamental analysis can yield powerful account building returns when trading and investing in stocks. Many books though seem to treat technical and fundamental analysis as two completely separate camps in which you have to decide which one to be in. You're either a technical trader in which timing the market with chart patterns and setups is the status quo or you're a fundamental investor where you're supposed to spend a ton of time looking at earnings to figure out if a stock is undervalued compared to its book value. Can you say boring...

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The Complete History of Quantitative Finance

Let me first say this article is a work in progress and is not quite a "Complete History of Quantitative Finance". At least not yet. 

 

I'd love to make it complete by asking that you go to the Contact Page with any additional contributions to Quantitative Finance that have not been mentioned or any corrections that may be needed to make this a complete history. Any contributors will get full credit and mentioned in the article with links. Thank you in advance for your help.

 

With that said, the notable contributions listed below give a glimpse at where Quantitative Finance came from and how it has evolved over the last 200 years. So let's get started...

 

Quantitative finance is the application of math, especially probability theory, to financial markets. As traders and investors, we're always looking to employ high probability strategies to increase profits and returns. Regardless of what investing strategy you use, chances are you are applying some type of quantitative finance in your approach to investing or trading. The historical timeline below shows the notable contributions listed so far.

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Why and How To Use the Directional Movement Index

Why and How to Use the Directional Movement Index

 

Predicting the future directional movement or lack of directional movement of a stock, commodity, or forex pair has to be one of the most sought after skills when it comes to trading and investing. For decades, new and supposedly improved technical trading systems and indicators have come and gone. Some trading systems may work for a while but ultimately stop working when the market conditions change. Where most technical analysts fail is in there inability to distinguish the type of market environment they are trading in and alter their strategy. They may even go as far as throwing out a viable trading strategy when it stops working and blame their losses on the trading system and move on to something else that seems to be working right now. Many times these technical trading systems have been curve fitted to imply future increased returns while at the same time adding so many indicators to your screen it's like looking through your windshield while driving through a swarm of love bugs. You simply cannot see where you are going. Isn't this the opposite of what we're trying to do as technical analysts?

 

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What Are Fibonacci Confluence Zones? (Part 3)

Now that we’ve covered the basics of using the Fibonacci retracement tool from the most recent swing low to swing high in an uptrend, what do you do when a stock in an extended uptrend forms multiple swing lows?

 

Remember, a stock in an uptrend will form higher highs and higher lows. Each one of these higher lows could be a starting point for drawing a retracement grid to the most recent swing high.

 

Fibonacci Confluence is when retracement levels from different fib grids coincide at a certain price level giving

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How to Use Fibonacci Retracements in Trading and Investing (Part 2)

In an up-trending market, price will form higher highs and higher lows. Another way of stating this is that price will move in impulses to the upside and retracements to the downside.

 

Traders will try and anticipate where these downward retracements or pullbacks will stop and then resume the upward trend. Buying these pullbacks in an uptrend is relatively straight forward where traders will use a rising trend line, moving averages, or prior support levels for buying entries.

 

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How To Use Fibonacci Numbers in Trading and Investing (Part 1)

I like to use Fibonacci Analysis in my technical analysis of charts. I get a lot of questions about why I use certain ratios, why I draw Fibonacci grids from certain swing lows to swing highs and not others, and also get asked how to use Fibonacci levels to enter and exit trades. So I thought it would be good to cover some Fibonacci techniques I use in a 3 Part Series to help people understand how you can harness the predictive power of Fibonacci Analysis.

 

The way many traders use Fibonacci Analysis in stock charts is by looking at Fibonacci retracements to find potential support or resistance in a trending stock or ETF prior to the support or resistance showing itself. In other words, use Fibonacci retracements to predict support and resistance which cannot be seen using other charting methods. Whatever charting software you use most likely has Fibonacci tools built in which has helped increase its popularity over the years.

 

Since this is the first post in the Fibonacci Trading series, let’s start from the beginning. 

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What Is Technical Analysis?

Technical analysis is the art of reading a chart. As technical analysts, we look at price action from the past to help predict the future.

 

It is best to think of a stock chart in psychological terms because the chart patterns and candlesticks that have formed are built from actual transactions from investors. In essence, each chart represents the behavior of all types of investors including long term investors, traders, hedge funds, and speculators that participated in the chart by buying or selling the stock.

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Start With Why!

A common theme I’ve come across when talking to DIY investors and traders is they often cannot articulate why they are investing or trading. Of course they all say the reason is to make more money but this simply isn’t enough of a motivator to be successful in today’s markets. To be successful, you need to think deeper.

 

So let’s take a moment and talk about why you’re doing this trading thing.

 

So first, why invest at all? What is investing to you?

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