Trading strategies, explained kindly
How the best-known systematic approaches work, the evidence behind them and the ways they fail. Every strategy comes with a picture, and you can test your instincts in the games.
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Strategies
strategy 1Trend followingMoving-average crossovers and breakouts that try to stay with a sustained move.strategy 2Mean reversionFading short-term extremes on the expectation that price returns toward an average.strategy 3Cross-sectional momentumRanking assets by past returns and holding the recent winners.strategy 4Pairs tradingTrading the spread between two related instruments rather than market direction.strategy 5Dollar-cost averagingInvesting a fixed amount on a schedule regardless of price.strategy 6CarryEarning the yield difference between two assets and accepting the risk that comes with it.strategy 7Value investingBuying assets priced cheaply relative to fundamentals.strategy 8Portfolio rebalancingBringing a portfolio back to target weights on a schedule or at thresholds.strategy 9Covered callsOwning a stock and selling a call option on it to collect premium.strategy 10Turn-of-the-month effectA calendar anomaly: index returns cluster around month end.strategy 11Volatility targetingScaling exposure so that portfolio risk stays roughly constant.
Learn by doing
gameBull or Bear?Guess the next ten candles and see how random markets really are.
quizWhich strategy am I?Eight short scenarios. Name the strategy behind each one.
flashcardsTrader vocabularyFlip cards for drawdown, Sharpe ratio, slippage and more.
Foundations
foundationRisk managementPosition sizing, Kelly, drawdowns and correlation.
referenceGlossaryShort definitions of the terms used across the site.
toolsCalculatorsPosition size and Kelly fraction, computed in your browser.
This article is educational. It is not investment advice and does not recommend buying or selling any instrument. Past performance of any rule set does not guarantee future results.