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3 Days Down strategy

This one is a classic. So simple, yet so effective. If you're swing trading SP500, don't consider 3 consecutive negative days a bearish signal - it's a bullish signal. If you enter on the open of the 4th day, together with an Internal Bar Strength condition and exit in 5 trading days you have a 64% winrate with a 2.55 gain/loss ratio.

Entry condition

  1. Three consecutive days with lower close

  2. Internal Bar Strength indicator is below 0.08


Exit condition

  1. Sell five days after entry


Here's the equity chart from Aug 1990 until today

It's a smooth equity curve with long periods with no major drawdowns


Statistics (Aug 1996 - today)

  • 63.58% winrate

  • 151 trades

  • 3008 points gained

  • 286 points max drawdown

  • 15.08% time in market

  • 2.55 Gain/Loss Ratio

  • Positive returns in 33 of 35 years


I think it's worth nothing that this strategy has barely any drawdown at all and that it's only 15% in market. Combine this swing strategy with some other strategies to leverage your capital when the strategy is not in market, and you will overachieve the index without doubt.


The ProRealTime™ code

DEFPARAM CumulateOrders = False

IBS = (Close - Low) / (High - Low)

IF (Close < Close[1]) AND (Close[1] < Close[2]) AND (Close[2] < Close[3]) AND (IBS < 0.08) THEN
	BUY 1 SHARES AT MARKET
	entryBar = BarIndex
ENDIF

IF LONGONMARKET AND (BarIndex > tradeindex + 5) THEN
	SELL 1 SHARES AT MARKET
ENDIF

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