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# Advances and Declines
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The idea for these strategies comes from chapter 5 (Market Breadth) of [*How Markets Really Work* ](https://moshferatu.dev/moshferatu/how-markets-really-work ) (2012) by Larry Connors.
As with most of the strategies from this book, they are meant to illustrate certain characteristics of the market rather than be traded directly.
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Advances refers to the number of stocks going up in the index (e.g., S& P 500) whereas Declines are the stocks going down.
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Unlike the book, I did not find there to be a significant difference between trades taken at either extreme of Advances / Declines.
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## Rules
### Advances
1. The asset (e.g., SPY) must be above its 200-day moving average.
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2. If the ratio of **advances to declines** is at least 2 : 1, enter a long trade.
3. Exit the trade after 5 trading days (~1 week).
### Declines
1. The asset (e.g., SPY) must be above its 200-day moving average.
2. If the ratio of **declines to advances** is at least 2 : 1, enter a long trade.
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3. Exit the trade after 5 trading days (~1 week).
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## Parameters
**Advances**: The portion of the ratio associated with advances. (Default: 1.0)
**Declines**: The portion of the ratio associated with declines. (Default: 2.0)
**Long-Term Trend Period**: The period of the long-term trend as measured using a simple moving average. (Default: 200)
**Days to Exit**: The number of days to wait before exiting any trade. (Default: 5)
*Whichever of Advances or Declines is greater is what is used as the numerator in the ratio.*
The default settings specify a declines / advances ratio of 2 : 1.
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## Backtest Results
### SPY
#### 2:1 Advances : Declines
![SPY Advances Analysis ](https://static.moshington.com/images/strategies/advances-and-declines/spy-advances-analysis.png )
![SPY Advances Summary ](https://static.moshington.com/images/strategies/advances-and-declines/spy-advances-summary.png )
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#### 2:1 Declines : Advances
![SPY Declines Analysis ](https://static.moshington.com/images/strategies/advances-and-declines/spy-declines-analysis.png )
![SPY Declines Summary ](https://static.moshington.com/images/strategies/advances-and-declines/spy-declines-summary.png )
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### QQQ
#### 2:1 Advances : Declines
![QQQ Advances Analysis ](https://static.moshington.com/images/strategies/advances-and-declines/qqq-advances-analysis.png )
![QQQ Advances Summary ](https://static.moshington.com/images/strategies/advances-and-declines/qqq-advances-summary.png )
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#### 2:1 Declines : Advances
![QQQ Declines Analysis ](https://static.moshington.com/images/strategies/advances-and-declines/qqq-declines-analysis.png )
![QQQ Declines Summary ](https://static.moshington.com/images/strategies/advances-and-declines/qqq-declines-summary.png )
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