This  weeks’ #hash crash, shows the impact Twitter can have on financial markets. It also shows why event trading merits utmost caution. Last Wed. the AP Twitter account was hacked, issuing a bogus tweet about an attack on the White House. A brief panic ensued and the Dow dropped close to 150 points. As soon as it was discovered that the message was a hoax, the market immediately regained the loss. This all happened within the course of 2 minutes. Following this, we received a multitude of questions. Does this affect SentiTrade? Does it affect the SentiTrade models? Did SentiTrade detect the bogus tweet? The short answer is: Read more

Tags #crash - APPL - hash crash - Norwegian pension fund - obama - pump and dump - Twitter - white house

As the Dow broke new highs earlier this week, the talking heads went wild. But whenever there’s a new all time high, the “experts” don’t adjust for inflation. If I were to say, “you know this is great, I’ve now got the same salary as I did in the great dotcom year of 1999”, it would raise eyebrows. The same standard does not apply for the Dow, however, it should. Here’s why: Read more

Tags 50/200 - adjusted for inflation - all time high - emotional language - inflation - omen - tonality

Let’s get right into how SentiTrade performed last year. Our fully automated trading system went live last summer and has to date produced a return of 47.65%. But before we get into the details of the performance summary, lets have a look at the philosophy behind what we call the “Crowd ShakeOut” system. Read more

Tags drawdown - emotional language - monthly return - overbought - oversold - sharpe ratio

Over the past two weeks, market sentiment has become increasingly clouded. Two critical indicators, namely volatility in the SentiTrade index, as well as declining moving average values contribute to this view. Volatility in in market sentiment (V-SQ) is measured by the frequency with which financial news swing from positive to negative. Historically, high volatility indicates Read more

Tags Bazooka - bearish signal - earnings season - European sovereign debt crisis - financial cliff - market nervousness - sentiment volatility

The opening range breakout (ORB) is one of the best known trading methods around. There are many different variations but the main point always stays the same; define an offset from the opening range and use it to identify the daily trend. You buy at a given level above market open and sell at a given level below. Read more

Tags breakout strategy - ninjatrader - open range breakout - orb - system trading - trading strategy - webinar