Using Internal Bar Strength as a Key Indicator for Trading Country ETFs
ArXiv ID: 2306.12434 “View on arXiv”
Authors: Unknown
Abstract
This report aims to investigate the effectiveness of using internal bar strength (IBS) as a key indicator for trading country exchange-traded funds (ETFs). The study uses a quantitative approach to analyze historical price data for a bucket of country ETFs over a period of 10 years and uses the idea of Mean Reversion to create a profitable trading strategy. Our findings suggest that IBS can be a useful technical indicator for predicting short-term price movements in this basket of ETFs.
Keywords: internal bar strength (IBS), mean reversion, exchange-traded funds (ETFs), quantitative trading, ETFs
Complexity vs Empirical Score
- Math Complexity: 2.0/10
- Empirical Rigor: 8.5/10
- Quadrant: Street Traders
- Why: The paper applies a straightforward arithmetic formula (IBS) and focuses on empirical testing of trading strategies, including backtests, performance metrics (Sharpe ratios), and sensitivity analysis to trading costs and slippage.
flowchart TD
A["Research Goal: Evaluate IBS as a Key Indicator for Trading Country ETFs"] --> B["Data Collection & Prep"]
B --> C["Compute Internal Bar Strength IBS & Price Data"]
C --> D["Define Mean Reversion Strategy Logic<br>e.g. Buy if IBS < X, Sell if IBS > Y"]
D --> E["Backtest Strategy on ETF Basket<br>(10 Year Period)"]
E --> F["Performance Analysis & Metrics"]
F --> G["Key Findings: IBS is an Effective Indicator<br>for Short-Term Mean Reversion in ETFs"]