How to Trade Multiple Up & Down Days in a Row
Traders know from experience, “what goes up, must come down.” And we know from the data that this is true.
What goes up must come down
Spinnin’ wheel got to go ’round
Lyrics from Spinning Wheel – Blood, Sweat and Tears
Few people know that the group Blood Sweat and Tears were the original creators of mean reversion trading (I’m kidding). Written in 1969, those lyrics still go through traders heads today when they see a security rising day after day.
On Friday we will be releasing our new Connors Research Strategy Series Guidebook; High Probability Trading with Multiple Up & Down Days. For the past 18 months our Strategy Guidebooks have taught traders new strategies all which have been backed with years of statistical test results.
In this new Strategy Guidebook, we looked at how ETFs performed after they rose a number of days in row, and how they performed after they declined multiple days in a row. We further looked at their performance if they continued to drop and could be purchased intra-day on a limit order.
What we found made Blood Sweat and Tears look prophetic and confirmed what professional traders have seen for years. Securities that rise or fall multiple days in a row tend to reverse a high percentage of the time (oftentimes over 80% of the time). When this occurs they can be successfully traded multiple ways including buying them, shorting them, and trading options with them. They are high probability trades which are simple to find and easy to trade for your portfolio.
Test Results: Long Only — Ranked by Wining Trade Rate (1/06–6/13)
|
Avg. % P/L |
Avg. Days Held |
% Winners |
|
3.27% |
3.0 |
85.64% |
|
3.42% |
2.9 |
85.46% |
|
3.37% |
3.3 |
84.87% |
|
2.66% |
1.7 |
84.01% |
|
3.08% |
3.5 |
83.98% |
If you are looking for high probability trading, you’ll want to read this new research in High Probability Trading with Multiple Up & Down Days. The Guidebook will be released this Friday and makes for fun (and profitable) reading over the three-day holiday weekend.
For more details on High Probability Trading with Multiple Up & Down Days and how to order our new Strategy Guidebook please click here now.