Over the past few months, the Owl Bundle User Group (OBUG) has been studying systematic trading strategies, focusing on Dr. Ken Long’s Critical States Template using the EdgeRater platform. With weekly sessions on backtesting, market analysis, and strategy refinement, we’ve been on a quest to uncover market edges and fine-tune our trading systems.
Here’s a snapshot of what we’ve been up to:
1) Market Scans – A Strategic View of the Market
Every OBUG session kicks off with a comprehensive market scan, offering insights into sector rotations, risk-on/risk-off dynamics, and volatility regimes. This top-down approach ensures our strategies align with broader market flows.
Risk-Off & Risk-On Shifts
Detected broad-based selling phases, triggering rotations into defensive assets like Gold (GLD) and Treasuries (TLT).
Spotted sectoral momentum in Energy (XLE), Technology (XLK), and Value stocks (IWD), guiding our trading focus.
Momentum & Sentiment Indicators
Applied RL30 Slope Z-Scores to gauge trend strength across key sectors and indices.
Used RISKZ to monitor market sentiment shifts, identifying potential inflection points.
Integrated TNX (10-year Treasury) NDX63 analysis, aligning macroeconomic signals with tactical trading decisions.
2) Backtesting – Hunting for Market Edges
At OBUG, we believe data-driven decision-making is the key to long-term trading success. Our backtesting sessions are designed to validate strategies rigorously before trading them live.
Critical States Template – Deep Dive
We launched an extensive study into Dr. Ken Long’s Critical States Template, zeroing in on high-probability setups defined by volatility, price location, and price path.
Top-Performing Strategies:
Godzilla: Emerged as the standout performer with the highest profit factor and risk-adjusted returns. Thrives in extreme price dislocations.
Catfish: Excelled in quiet, mean-reverting markets, especially with Index ETFs.
Fireworks: Shined in volatile breakout conditions but revealed areas for refinement in ETF-focused setups.
Humpty Dumpty: A rare but high-reward setup, capitalizing on aggressive mean reversions after sharp declines.
FenceSitter: Demonstrated moderate gains with good win rates, ideal for range-bound markets.
Backtesting Other Strategy Ideas
Beyond Critical States, we explored other strategic opportunities:
TNX vs. SPY Analysis:
Discovered macro-driven edges by analyzing Treasury yields and their impact on SPY price action.
RL10xSMA30 with Baby Dragon Exit:
Explored trend-following setups, optimizing both intraday and daily timeframes for dynamic entries and exits.
Seasonal Strategies:
Revisited the classic “Sell in May and Go Away” concept, integrating sector-specific insights to fine-tune seasonal exposure.
Why Join OBUG? – Empower Your Trading Journey
OBUG is a collaborative group where traders come together to explore and refine trading strategies.
Continuous Learning:
Stay ahead with ongoing studies, deep dives, and research into systematic trading frameworks.Community:
Connect with like-minded traders all eager to share knowledge and refine techniques.Cutting-Edge Strategies:
Gain access to trading rules, and more importantly, develop your own strategies with support.Learn How To:
Backtest strategies effectively
Run correlation analyses
Develop and refine non-correlated systems
Master tools like EdgeRater and beyond
If you're passionate about systematic trading, fascinated by Dr. Ken Long’s methodologies, and eager to collaborate with a dedicated group of traders, OBUG is the place for you.
Join us today! For more details and how to get involved, click here.