Daily Dip Buy

NAS100, XAUUSD · D chart · strategy s10_dip_buy · 4 variations

Buys the Nasdaq or gold after a weak daily close and sells into the bounce a few days later.

What it is about

Markets that rise over the long run, like the Nasdaq 100, often overreact in the short run. A day that closes near its low, or at the lowest close of a week, tends to be followed by a bounce over the next few days. This is called 'mean reversion': after an unusually weak move, price tends to drift back toward normal.

The strategy simply buys after such a weak close and sells as soon as the market has bounced. The rules are well-known published ones from Larry Connors and Cesar Alvarez, tested here without changing their basic logic.

It wins often, but each win is small. The safety stop is wide, so the occasional loss is bigger than a typical win. The appeal is a steady, low-stress return that behaves differently from the breakout strategies.

How it trades

Chart & market

Daily candles (each trading day runs 18:00 to 17:00 New York time). NAS100 (the Nasdaq 100 index) in A and B, gold in C and D. Buys only.

Setup

IBS rule (A, C): IBS (internal bar strength) shows where the close sits in the day's range, (close - low) / (high - low). A value below 0.2 means the day closed in its bottom 20%. Double 7s rule (B, D): today's close is the lowest close of the last 7 days.

Entry

IBS: buy at the next day's open (18:00 New York). Double 7s: buy right at the signal day's close (17:00 New York).

Stop loss

1.5 ATR below the entry, where ATR = the average daily range over the last 10 days. This is a safety stop that caps a crash and sizes the position; it is rarely hit. The distance is 1R (R = the amount risked).

Exit

IBS: at the close of the first day that closes in the top 20% of its range (IBS above 0.8), or at the 5th day's close at the latest. Double 7s: at the first close that is the highest close of the last 7 days, or after 10 days. Variation C also takes profit as soon as the trade is +1R.

Trade management

One trade at a time. A new signal while a trade is open is ignored.

The decision is made at the 17:00 New York daily close. About 3 trades a month for the IBS versions, about 1-2 for Double 7s. IBS trades usually last 1-2 days. Double 7s trades usually last about a week.

What to expect

High win rate: about 70% for the Nasdaq IBS version and 60-64% for the others. But the average win is smaller than the average loss (A: 0.52R vs 0.71R).
About 3 trades a month (IBS) or 1-2 (Double 7s).
Short losing streaks: at most 3-6 in a row in the backtest.
Small drops: the largest drop from a peak was 4.3R-9.5R.
Small totals too. Backtest totals at zero cost range from +24.8R (gold Double 7s) to +44.5R (Nasdaq IBS) over 2018/2019-today.

Risks and caveats

Overnight financing (swap) is not included. Because each trade makes little, financing matters here: the research charged about 6% a year on the Nasdaq and 4% on gold, which eats a noticeable part of the profit.
It buys into weakness. In a real crash the market can keep falling, or gap through the stop, giving a loss bigger than usual. 2022, a falling year for the Nasdaq, was slightly negative for both Nasdaq versions.
The gold versions are weaker. They lost in 3-4 of 9 years, and both are negative in 2026 so far (C −1.1R, D −4.3R).
Since the profit per trade is small, the spread and worse fills would shrink it quickly: the results are at zero cost, so check your broker's spread in the calculator.

Where it comes from

Classic published short-term rules (Larry Connors and Cesar Alvarez). In the research (October 2026), 85% of 1,380 Nasdaq settings and 65% of gold settings made money in the 2018/2019-2023 'train' period. Results were checked on 2024-2026 (the 'test' period). Waiting for a confirmation (buying only above the signal day's high) made it worse.

Main variation: s10-A ★ Main

Live result

−0.6R

2 closed · 0 open · zero cost

Backtest total

+44.5R

281 trades · +0.16R a trade · win 70%

Backtest max drawdown

−4.3R

total ÷ drawdown 10.3

Years won

7/8

3 trades / month

Backtest R per year (zero cost), s10-A

The variations

Each variation is the same strategy with a different approach, trading its own paper account. Click one to see exactly what it changes.

s10-ANasdaq, IBS★ Main

The base rules on the Nasdaq 100: buy the next open after a close in the bottom 20% of the day, sell after a strong close or 5 days. A stock index is where short-term dips have bounced most reliably.

s10-BNasdaq, Double 7s

Uses the Double 7s rule instead: buy at the close of a 7-day low and sell at a 7-day high, allowing up to 10 days. It waits for a deeper pullback and a fuller recovery, so it trades about half as often as A.

s10-CGold, IBS with 1R target

The IBS rule on gold, plus a take-profit at +1R. Gold's bounces are less dependable than the Nasdaq's, so C banks +1R when it gets there instead of waiting for the strong close.

s10-DGold, Double 7s

The Double 7s rule on gold: buy a 7-day-low close, sell at a 7-day-high close or after 10 days. It gives gold's slower swings a full week to recover.

Variations side by side

Live result of all 4 together: −0.3R (zero cost).

			Live paper account (R, zero cost)				Backtest 2018 – today (R, zero cost)

s10-A★ MainDaily dip buy	NAS100	D	−0.6R	2	50%	–	+44.5R	+0.16R	7/8	3	70%	−4.3R
s10-BDaily dip buy	NAS100	D	–	0	–	1	+27.9R	+0.19R	6/8	1.6	60%	−9.5R
s10-CDaily dip buy	XAUUSD	D	+0.3R	2	50%	–	+27.1R	+0.09R	6/9	2.9	64%	−5.7R
s10-DDaily dip buy	XAUUSD	D	–	0	–	1	+24.3R	+0.14R	5/9	1.6	62%	−7.0R

Main = the variation with the most backtest R per R of max drawdown (2018 – today, zero cost). It is picked on that history, so the live accounts are the real test.