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Category Archives: Mean Reversion Strategies
Bollinger Band Tactics
Bollinger Bands draw their power through two important characteristics. First, they exhibit an underlying trend-range axis just like price or moving averages. Second, they constrict or expand as they move. The interaction between these two forces draws unique patterns as … Continue reading
How To Trade With Relative Strength Index
On the assumption that traders are in a trading market rather than a trending market, they can observe the following behaviours of the RSI: If the index rises above 70, an intermediate top is usually imminent, according to the concept … Continue reading
Refining Trading Systems And Testing For Robustness
In this article we present a simple trading system. Step 1: Selecting a market and timeframe One of the most popular markets these days is the e-mini S&P, and that’s not without a reason: It’s a 500 company index. One … Continue reading
%b System #1
Bollinger %b is a single line whose value is determined by where the closing price is in relation to the upper and lower Bollinger lines. When the close is exactly at the lower line, %b equals 0. Below the lower line, %b … Continue reading
%b System #1 With Chandelier Stop
This is the same as %b System #1 except we replaced the trailing stop with the Chandelier method. I’ve heard of the Chandelier stop before in Dr.Alexander Elder’s “Come Into My Trading Room”. Here’s what a user called EZCurrency said (HHV = highest … Continue reading
Range Trading and Mean Reversion Strategy
Scalping: the art of extracting small but frequent profits on an intraday trading basis. Scalping strategies revolve around finding predictable movements in price, and they very often involve trading narrow intraday ranges. Given that currencies tend to fluctuate rapidly through the very … Continue reading
Combining Mean Reversion and Momentum Trading Strategies in Foreign Exchange Markets
5. Conclusion This paper employs a trading strategy, previously applied only to the stock market that creates abnormal returns in the FX market. By running a simple parametric test, I find that UIP deviations follow mean reversion and momentum. In the FX … Continue reading
Scalping Strategies Event Risk Trading
For many of the uninitiated, first time currency traders, the lure of high volatility that develops after a major economic indicator or any otherwise scheduled piece of event risk is announced offers the opportunity for quick profit. However, inexperience and the wrong … Continue reading
TD Sequential Setup Trading Strategies
TD Sequential is designed as a full trading framework. However, we focus on specific trading rules within the indicator here. We investigate using the setup component of the TD Sequential indicator to generate trades and assess how it has performed … Continue reading
Fading Extreme Moves Strategy
In this article, we examine trading strategies designed to fade extreme moves in price action. Specifically, we look at consecutive closes and also the daily range between highs and lows to generate trading signals. We find this approach is generally profitable for EM, but … Continue reading
