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Catching Night Swings With IBS

Catching Swings at night is a great way of diversifying your portfolio. In this edge, we catch night swings in the SPY that tracks the S&P.

Edge Details

Market:

S&P 500

Security:

SPY/ES

Access Level:

Silver

Profit Factor: 2.84

Avg. Trade: $28

Win Percent: 70%

Trades: 242

A Closer Look

As can be seen in the infobox above, this edge trades the S&P 500 through the SPY. However, it should work well on other securities that track the same index as well.

The edge is composed of:

  1. An Oscillator
  2. IBS
  3. A Market Regime Filter

1. An Oscillator

The first component of the strategy is an oscillator that ensures that the market is in a favorable position to make an upmove during the night.

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2. An IBS Filter

The IBS is an indicator that’s not as well known as other ones like the RSI. However, as is many times the case in trading, it’s the things that are nor employed by the large masses that tend to work the best.

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3. A Market Regime Filter

To make sure that we take trades only when the market is most likely to rise during the night, a regime filter is also part of the edge.

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Why Care For Night Edges?

New traders normally find daytrading to be the most alluring trading form. However, there are other trading forms that are easier while still holding great profit potential.

One form of strategies that is often overlooked, is strategies that trade only during the night. That is strange, considering how profits have been distributed historically. Actually, if you would have held the S&P 500 from open to close every day 20 years back, you had been pretty much breakeven. Instead, if you would have bought on the close and sold on the open, you had profited as you would expect from a rising index market.

Most of the returns of investments in the stock markets are made during the night. That’s why night strategies should be part of every trader’s portfolio.

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Logic

Below the rules of this very edge are defined for you to replicate in your own testing;

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