Turn of the Month Strategy [Honestcowboy]The end of month effect is a well known trading strategy in the stock market. Quite simply, most stocks go up at the end of the month. What's even better is that this effect spills over to the next phew days of the next month.
In this script we backtest this theory which should work especially well on SP500 pair.
By default the strategy buys 2 days before the end of each month and exits the position 3 days into the next month.
The strategy is a long only strategy and is extremely simple. The SP500 is one of the #1 assets people use for long term investing due to it's "9.8%" annualised return. However as a trader you want the best deal possible. This strategy is only inside the market for about 25% of the time while delivering a similar return per exposure with a lower drawdown.
Here are some hypothesis why turn of the month effect happens in the stock markets:
Increased inflow from savings accounts to stocks at end of month
Rebalancing of portfolios by fund managers at end of month
The timing of monthly cash flows received by pension funds, which are reinvested in the stock market.
The script also has some inputs to define how many days before end of the month you want to buy the asset and how long you want to hold it into the next month.
It is not possible to buy the asset exactly on this day every month as the market closes on the weekend. I've added some logic where it will check if that day is a friday, saturdady or sunday. If that is the case it will send the buy signal on the end of thursday, this way we enter on the friday and don't lose that months trading opportunity.
The backtest below uses 4% exposure per trade as to show the equity curve more clearly and because of publishing rules. However, most fund managers and investors use 100% exposure. This way you actually risk money to earn money. Feel free to adjust the settings to your risk profile to get a clearer picture of risks and rewards before implementing in your portfolio.
Simplertrading
2 Moving Averages | Trend FollowingThe trading system is a trend-following strategy based on two moving averages (MA) and Parabolic SAR (PSAR) indicators.
How it works:
The strategy uses two moving averages: a fast MA and a slow MA.
It checks for a bullish trend when the fast MA is above the slow MA and the current price is above the fast MA.
It checks for a bearish trend when the fast MA is below the slow MA and the current price is below the fast MA.
The Parabolic SAR (PSAR) indicator is used for additional trend confirmation.
Long and short positions can be turned on or off based on user input.
The strategy incorporates risk management with stop-loss orders based on the Average True Range (ATR).
Users can filter the backtest date range and display various indicators.
The strategy is designed to work with the date range filter, risk management, and user-defined positions.
Features:
Trend-following strategy.
Two customizable moving averages.
Parabolic SAR for trend confirmation.
User-defined risk management with stop-loss based on ATR.
Backtest date range filter.
Flexibility to enable or disable long and short positions.
This trading system provides a comprehensive approach to trend-following and risk management, making it suitable for traders looking to capture trends with controlled risk.
