High-frequency trading
Pairs trade
Alternative trading system
Electronic trading
Stock exchange
Best insight from top research papers
The most profitable proven trading strategy appears to be momentum investing, which has consistently earned non-zero returns over time . This strategy involves selecting stocks based on their past performance over a specific time period, such as two to twelve months. It has been observed to earn average monthly returns of 1.57% over the period from 1965 to 2014, and even larger returns of 2.27% in the most recent ten-year period . However, it is important to note that the profitability of this strategy may be affected by transaction costs, especially when trading in smaller stocks . Nevertheless, a strategy that focuses only on the winner portfolio and avoids trading the loser portfolio has been found to earn strong and persistently abnormal profits, even after accounting for transaction costs .
Related Questions
What business strategies would be most successful?4 answersSuccessful business strategies vary depending on the context and industry. In the context of emerging markets, it is important for companies to develop novel business models and strategies that are customized to fit the nation's institutional context. In the case of start-up businesses, formulating start-up strategies to respond to competition in a crowded marketplace is crucial for survival. For businesses in the field of RNA homeostasis, understanding the viral regulation of RNA-protein complexes can be a potential target for the development of antiviral therapies. In the realm of stroke and cardiovascular disease prevention, a population-wide approach aimed at reducing key modifiable risk factors is considered the best strategy. Finally, for small salon business owners, implementing strategies to maintain business growth, building customer relationships, securing financial capital, and engaging in effective marketing are essential for survival.What is the best strategy to trade Bitcoin?4 answersThe best strategy to trade Bitcoin is to use machine learning models for prediction and apply trading strategies based on the predicted results. Wang and Yansuggest using traditional machine learning regression models to predict the changes in Bitcoin price and then transforming the regression results into classification analysis for higher accuracy. They also construct a Machine Learning Trading Strategy that outperforms the traditional Double Moving Average Strategy. Gao and Houcompare the application effect of arbitrage strategy and trend strategy in machine learning on Bitcoin and find that both strategies have potential. Additionally, Cohenexplores algorithmic trading strategies for Bitcoin and finds that the moving average convergence divergence (MACD) and pivot reversal (PR) strategies outperform the buy and hold strategy. These findings indicate that using machine learning models and algorithmic trading strategies can be effective for trading Bitcoin.What is the most profitable portfolio?5 answersThe most profitable portfolio varies depending on the specific context and time period analyzed. In the context of portfolio design approaches, the mean-variance portfolio (MVP) performed the best in terms of risk-adjusted returns on out-of-sample data. However, the autoencoder portfolios outperformed their counterparts in terms of annual returns. In the analysis of momentum and contrarian portfolios, the contrarian portfolios were found to be the most profitable, particularly within the cross-sectional analysis. The optimal portfolio of risky assets, taking into account the investor's attitude to risk, can be determined by combining the efficient frontier with investor-specific indifference curves. In the study of optimal portfolios composed of LQ45 stocks, the optimal portfolio consisted of specific stocks and was only effective for a limited time period. Finally, in the analysis of a portfolio mimicking Bitcoin, mixed results were found in terms of portfolio returns and standard deviation compared to Bitcoin.Which trading strategy is more profitable in daytrading on cryptocurrency exchange?5 answersPairs trading and moving average trading strategies have been studied for day trading on cryptocurrency exchanges. The results show mixed performance for these strategies. Pairs trading strategies, which exploit mean reversion in prices, underperform classical benchmarks in backtests. However, higher-frequency trading with the distance method shows significantly better performance, indicating the inefficiency of cryptocurrency markets. On the other hand, moving average trading strategies, specifically using the 20-day moving average, generate excess returns after controlling for the average market return. These results suggest that cryptocurrency markets are inefficient and that a variable moving average strategy can be successful in day trading.Which trading strategy beats buy and hold?5 answersThere are several trading strategies that have been shown to outperform the buy-and-hold strategy. Hui and Chan (2017) construct a time-dependent strategy that shows mixed results. Baumann proves mathematically that control-based trading strategies can generate positive gains, even with small and unknown trends. Hui and Chan also find that their strategy outperforms the buy-and-hold strategy when tested on real estate and equity indices. Tran showcases a wavelet trading strategy that consistently beats the market, contradicting the efficient market hypothesis. Tran further demonstrates that the wavelet trading strategy outperforms the market at a fast rate, providing a counterexample to the claim that the market is unbeatable.What are some of the best strategies for smart money trading?4 answersThe best strategies for smart money trading include momentum trading and contrarian trading. These strategies can be used to make profits in the stock market by taking advantage of short-run momentum and long-run reversals. In addition, utilizing data science and distributed ledger technology can enhance momentum trading strategies in the crypto-currency market. Leveraged money traders play a key role in the Bitcoin futures market and their trading behavior can be followed to construct profitable trading strategies. It is also important to accurately predict the value fluctuations of assets like gold and bitcoin in order to maximize profits. Establishing models and using indicators can help in predicting market trends and making informed trading decisions.
