Index trading Strategies - Bottom up or Top Down?

Discussion in 'Strategy Development' started by etfarb, Apr 9, 2013.

  1. etfarb


    I focus my attention on trading index's. Index's unlike commodities and FX really don't follow traditional TA. Index's are often mean reverting. I currently analyze an index based on its connects, i.e. the vix, bonds, USD, etc. I also look at a couple of the largest components to help me get a feel for how strong the index actually is.

    What do you believe is more important, using a Top down approach (i.e. the factors/variables that are connected to the index externally? or a Bottom up approach - i.e. the actual components?
  2. dom993


    To be honest, what anyone believes is of no interest whatsoever.

    You should backtest the different approaches that you identified, and come to your own conclusions, based on "facts".
  3. etfarb


    Thanks dom!