Trading strategies — do they actually work?

An RSI dip-buy waits for a market to look oversold — typically RSI below 30 — then buys, betting on a bounce. It is one of the most popular beginner strategies because the rule is simple and intuitive. But buying the dip is not an edge by default: in a downtrend an oversold reading can stay oversold for weeks. The only way to know if it works on your market is an honest, out-of-sample backtest.

A moving-average crossover buys when a fast average crosses above a slow average (the golden cross) and exits or shorts when it crosses back below (the death cross). It is the canonical trend-following rule and a great teaching strategy because it is purely mechanical. It also has a well-known weakness: in choppy, sideways markets it whipsaws and bleeds money. Whether a given crossover pays depends entirely on the market and must be tested out-of-sample.

Momentum trading does the opposite of bargain hunting: it buys what is already going up, betting that strength persists. It is one of the most academically documented market anomalies, yet it is also prone to sharp, brutal reversals — the so-called momentum crash. A momentum rule can have a real edge or be a backtest illusion; the difference shows up only out-of-sample.

Mean-reversion bets that price snaps back toward an average after stretching too far from it. It is the philosophical opposite of momentum: instead of buying strength, you fade extremes. Done well it produces a high win rate of small gains; done carelessly it picks up pennies in front of a steamroller. The win-rate trap makes honest, out-of-sample backtesting especially important here.

A breakout strategy buys when price pushes through a prior high (or sells when it breaks a prior low), betting that a new range or trend is starting. It is the most intuitive trend-entry idea there is. Its nemesis is the false breakout — the move that pokes through the level, sucks traders in, and immediately reverses. Whether breakouts pay on your market, and how to filter the fakes, is a question only an out-of-sample backtest can answer.

Gap-and-go is a day-trading playbook: when a stock opens sharply higher than the prior close on heavy volume and news, you buy the continuation, betting the gap runs rather than fills. It is fast, popular with small-cap momentum traders, and very regime-dependent. It also has a built-in trap — the gap fill — and is heavily affected by costs and slippage, so honest backtesting with realistic frictions is non-negotiable.

Following Congress trades means mirroring the stock transactions that U.S. lawmakers are legally required to disclose under the STOCK Act. The appeal is obvious — these are well-connected people — and the data is free and public. But there is a structural catch: you only learn about a trade after a reporting delay, so you are never trading on the same information at the same time. Whether the disclosed flow still predicts anything is a testable question, and TradeBricks lets you test it for free.

Gamma, or dealer-flow, trading is built on a structural idea: options market makers must hedge their books, and that hedging mechanically buys and sells the underlying in ways that can dampen or amplify price moves. Traders use gamma exposure (GEX) and the gamma flip level to anticipate whether the tape will be pinned and mean-reverting or trendy and explosive. It is a genuinely sophisticated concept — and one where honest backtesting is hard, because there is no free historical options chain.