Research
Do volume spike signals work?
A volume spike signal fires when volume is at least twice its 20-day average and price moves at least 1% the same day. We sent these signals in our first version, then tested them properly. Here is what happened.
| Signal | Trades | Net per trade | vs random | Verdict |
|---|---|---|---|---|
| Volume spike, price down | 768 | -1.6% | -0.6% | No edge over random |
| Volume spike, price up | 1,084 | +0.6% | -1.7% | No edge over random |
24 markets (crypto, US stocks, forex, gold, oil), 2017–2026. Entries at the next open, 1 ATR stop, 2 ATR target, 10-day limit, costs of 0.03–0.15% per side. "vs random" compares with random entries in the same markets and direction using the same exits; a bearish signal can beat random shorts in a rising market and still lose money. Hypothetical results have inherent limitations.
What we use instead
Two rules that held up on data they were not chosen on: buying sharp pullbacks (RSI(2) under 10) in stocks and crypto that are above their 200-day average, and trading 20-day breakouts in crypto.
See the rules, backtest and live record →Questions
Do volume spike signals work?
Not on their own, in our test. Across 24 markets since 2017, using the alert's stop and target and realistic costs, the volume spike signals we tested did not make money compared with random entries in the same markets.
How was this tested?
Each signal was replayed day by day using only data available at the time, entered at the next open, exited at a 1 ATR stop, a 2 ATR target or after 10 days, and compared with thousands of random entries using the same exits. Results are hypothetical.
What does Vantum use instead?
Two rules that held up on data they were not chosen on: buying sharp pullbacks (RSI(2) under 10) in stocks and crypto that are above their 200-day average, and trading 20-day breakouts in crypto.
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