At AbleWayTech, we believe great trading is not built on luck — it’s built on data, structure, and edge awareness. At our Owl Bundle User Group (OBUG) we backtest Dr. Ken Long’s trading methodologies and techniques to better understand the trading edges as we develop our library of uncorrelated trading systems.
Using advanced tools like EdgeRater and Thinkorswim, we systematically analyzed, backtested, and stress-tested strategies across multiple timeframes, market regimes, and asset classes.
Here’s a look at what we explored over the past two months (March - April 2025)
Key Areas of Focus
1️⃣ PSAR-Based Strategy Enhancements
Explored counting PSAR dots and PSAR Count Z-Scores to identify trend exhaustion.
Parameter optimization of PSAR parameters (Acceleration Factor, Acceleration Limit, Regression Period) to optimize long entry and exit rules.
Found significant improvements in strategy durability and trend capture by adjusting PSAR settings.
2️⃣ Critical State System Refinements
Deepened our work on the Critical States Template ("Sniper Radar") to identify statistically abnormal price movements.
Investigated Profit Stops, Protective Stops, and Adaptive Exits using volatility bands and NDX-based price locations.
Developed systematic processes for building diversified portfolios using Critical States models.
3️⃣ Market Scan and Sector Rotation Insights
Weekly Market Scans combining RiskZ plots, RL30Slope Z-Scores, Cross-Asset Rotations, and Breadth Metrics to guide trading biases.
Added HYG (High Yield Bonds), DXY (Dollar Index), HV22/HV63 Volatility Studies, and Put/Call Ratio Z-Scores into market condition templates.
Backtests confirmed that sectors like Materials (XLB), Technology (XLK), and Financials (XLF) act as leading indicators for SPY rallies.
4️⃣ Portfolio Diversification Studies
Showed that combining low-correlated ETFs (e.g., SPY + EMB + XLP) produced higher returns and lower drawdowns than trading SPY alone.
Reinforced the principle that "performance is additive across uncorrelated systems, but drawdowns are not."
5️⃣ Advanced Intraday Studies
Integrated multi-timeframe confirmation techniques:
Example: 3-Day RL10 > Baby Dragon to filter daily PSAR Flip entries for higher performance.
Tested Z3Pinch filters and RL30 trend filters on intraday NQ futures trading, improving win rates and expectancy.
Results at a Glance
PSAR Flip Strategy: Increased win rates from ~55% to ~67% using advanced exit structures.
Exits: Increased robustness with multi-level filters and adaptive exits.
Sector Leaders for SPY Timing: Materials, Tech, and Financials identified as early movers.
Volatility Filters: HV22 > HV63 crossovers validated as significant warning or trading triggers.
Portfolio Construction: Diversified, non-correlated ETF portfolios outperformed concentrated SPY-only portfolios, delivering smoother, higher risk-adjusted returns.
Join us
If you're interested in understanding trading edges — and learning how to exploit them across markets and regimes — we invite you to join. Click here to learn more about OBUG at AbleWayTech. Learn, test, adapt — and trade smarter!