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Fed Funds Rates and Stock Index Trading Systems

Posted by David Bean on

True price discovery is difficult when the cost of money is free. Interest rates affect price discover and market volatility. 

In the video, I go over a trading system that I developed in the years 1999-2000 before I became a full time trader in 2001. We look at the equity curve for when the Fed Funds rate is less than 0.25% vs. when it is greater than 0.25%. We also go over average daily ranges. In 2017, we traded through 0.3% average daily ranges based on the closing price. Currently we are trading 2% average daily ranges based on the closing price.

Consider strategies that have worked the last few years and those that have worked prior to 2009 when interest rates and volatility were "more normal".

 


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