Blog, Strategies

Market Pulse: Same signal, bigger playing field

Posted by Erik Martin Hansén

On Fridays, Market Pulse focuses on rule-based strategies. We use systematic models based on data, objective signals and risk diversification.

In last week's episode of Market Pulse, we asked a question that many investors never consider: can a signal with higher accuracy still be worse? We showed that the answer is yes, with concrete numbers from our Bollinger Band-based signal compared to our existing TTR strategy.

This week we're moving forward. Instead of fine-tuning parameters, which easily leads to over-optimization, we tried something different: giving the signal a much larger universe to choose from. We expanded from just Swedish OMX stocks to the S&P 500, Russell 2000 and Nasdaq 100, without changing a single rule in the strategy itself.

The result surprised us, and not for the reason you might think.

We'll go over what actually changed, why it changed, and what it means for how you should think about signal quality and accuracy going forward, whether it's about our strategies or something you see someone else showing off on social media.

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Posted by Erik Martin Hansén
After studying at Uppsala University, Erik Hansén has worked in the financial industry since 2007 at several brokerage firms and traded privately. In his role as an analyst, Erik has written highly regarded market letters.

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