BuildAlpha

The market is “overbought” or “oversold” are common phrases you will hear across the finance space. However, it is actually extremely rare for these conditions to be true. Today, we’ll attempt to show how trading rules can provide a better picture of the market while enhancing trading performance. BuildAlpha : First, let’s simply define overbought as a 14 period RSI of greater or equal to 70.00 and let’s simply define oversold as a 14 period RSI of less than or equal to 30.00. Below is a chart showing the RSI of the S&P 500’s ETF (NYSEARCA:SPY) with the overbought and oversold levels plotted. From January 2002 to May 2017 here are some stats: Days overbought 214 out of 3,878 or only 5.5% Days oversold 60 out of 3,878 or only 1.5% Days in the middle roughly 3,604 out of 3,878 or 92.9% Of course when these overbought or oversold conditions are true the markets do appear easier to trade as volatility often expands and it seems easier to skim some m...

In this week’s Free Friday strategy (#9) I display a strategy built using inter-market signals. Inter-market signals/analysis is the ability to generate trading signals and filters for a primary market based on what another market may be doing. For example, you may only want to buy the stock market when gold is trading lower or when bonds are below their 200 simple moving average. Build Alpha now let’s you test these exact sort of scenarios and build strategies taking into account up to 3 markets (plus Vix). This specific strategy was built for SPY (S&P500 ETF) but takes into account Gold (GLD ETF) and holds for a maximum of 2 days. There are no other exit rules or sophisticated risk management; all trades assume only a 100 share position for testing purposes. The entry: 1. $SPY’s 2-period RSI <= 90 2. Gold’s 50 period simple moving average is greater than Gold’s 200 period simple moving average 3. Gold closed below both its 10 peri...

Trading in financial markets is a tedious job. An expert’s advice is always required to invest in capital markets for a new trader. Listen to all fund managers, their views of in vesting based on different market conditions. Always do lot of research and take guidance from experts before investing. A new trader must utilize a stop loss, avoid greed and do not trade with fear while investing. Make a portfolio of strategies or shares from different sectors and maybe receive help from your broker. There are experts who provide market tips which enable beginners to make a wise decision, but on the other hand, you can take the help of this new trending software which is proving to be one of the best solutions in the market: Build Alpha . Fresh investors always go for those stocks which have reasonable valuations or big growth potential. Different market analysts have their own investment strategies owing to the Bull and Bear phase of the market. There are ...