Today, I came across a super interesting case that I want to share with you all. 📈🌟 It turns out that Larry Connors, along with trader Cesar Alvarez, conducted a fantastic experiment with a group of inexperienced traders. The idea was to see if they could achieve good results using a simple strategy called "Double Seven". 😲💡

Experiment Details:

  1. Participants: People with no previous trading experience. 🧑‍🤝‍🧑

  2. Strategy Used: The "Double Seven" strategy, which is a mean reversion strategy. This strategy involves:

    • Buying at the close when the price is above the 200-day moving average and closes at its lowest in the last seven days. 📉

    • Selling when the price closes at its highest in the last seven days. 📈

  3. Results:

    • S&P 500 (SPY): The strategy executed 154 trades since 1993, with an average gain of 1.18% per trade and a success rate of 82.5%. 💪

    • Portfolio Performance: Testing the strategy on a portfolio of ETFs, with a maximum of five positions open at the same time, resulted in 1189 trades with an average gain of 0.63% per trade. The success rate was 72.3% and the profit factor was 1.53. The compound annual growth rate (CAGR) was 5.74%. 📊💹

Conclusions:

This experiment showed that even novice traders can achieve consistent profits by following a simple and well-defined strategy like the "Double Seven". This approach not only makes decision-making easier but also helps maintain discipline and emotional control, crucial elements for success in financial markets. 🙌📉

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