Was Wrong About Buying Strength

Data changed my mind

If you want the actual systems and data behind this, it’s all inside StatsEdgeTrading.

I’ve said it. You’ve probably heard it. Buy relative strength on bad days.

Turns out… that edge doesn’t hold up.

I ran 1,600 backtests across 20 years of data. The idea was simple: market sells off, buy the strongest names, ride the resilience. Sounds logical. Institutions aren’t selling those… right?

Wrong.

The best version of that system barely produced ~3% annually with mediocre drawdowns. Translation: you’re better off doing almost anything else.

Then I flipped it.

Instead of buying strength, I bought the weakest stocks on selloff days.

Everything improved:

• Higher win rate

• Better profit factor

• Roughly 2 to 3 times the returns

Why? Panic selling isn’t selective. It’s mechanical. The edge isn’t in strength… it’s in the snapback.

Action Plan

• Trigger: SPY down ~2%

• Entry: worst performers (non-news driven)

• Exit: short-term bounce using RSI or short MA

• Hold: quick, under 10 days

This is mean reversion, not momentum. And right now, Quant beats vibes.

The bigger lesson? Test everything. Especially the stuff that “everyone knows.”

Want the systems, scans, and live outputs?
Go to www.statsedgetrading.com