Buy the Dip
Calculate QQQ RSI(14) and SMA(200) daily. Backtest max drawdown: -76.2%.
Extreme risk: not investable
This strategy's worst historical drawdown is about -76%, a near-total loss from peak. It is published for research and illustration only. Nothing here is investment advice or a recommendation to buy, and you should not allocate capital you are not prepared to lose almost entirely.
That fall came on Oct 26, 1987, a simulated 3x. Since SQQQ and TQQQ launched (Feb 11, 2010), the worst fall was -21%. This warning uses the full history.
This warning is about holding it on its own. Inside some diversified BestFolio portfolios a strategy like this appears only as a small, capped sleeve, where its risk is bounded and offset by holdings that behave differently.
For lower-risk, diversified strategies, browse the full catalog.
Strategy & methodology
Calculate QQQ RSI(14) and SMA(200) daily; Walk through every trading day, turning each switch on or off only when it crosses its own entry or exit level; If Oversold (RSI entered < 29.7, hasn't exited > 30.3) → 100% TQQQ; If Overheated…
- Strategy type:
- Tactical asset allocation
- Rebalance frequency:
- Daily
- Original publication:
- 2024; results after that are out-of-sample for the original research. All results are backtest simulations.
- Data through:
- Backtest data through 2026-10-01.
Simulated history
- Full history, since 1985
- 24.7% a year, worst fall -76.2% (Oct 26, 1987, a simulated 3x)
- Since SQQQ and TQQQ launched (Feb 11, 2010)
- 29.6% a year, worst fall -21.2% (Aug 25, 2015)
Still partly simulated until May 2019: DBMF and USMV are reconstructed before their own launch.
Stand-in funds and until when (7)
- DBMF: KMLM before May 8, 2019
- USMV: SPY x0.75 before Oct 20, 2011
- TQQQ: simulated 3x QQQ before Feb 11, 2010
- SQQQ: simulated inverse 3x QQQ before Feb 11, 2010
- ZROZ: TLT x1.4 before Nov 4, 2009
- UGL: simulated 2x GLD before Dec 3, 2008
- IEI: IEF x0.7 before Jan 11, 2007
Before these dates the backtest uses a stand-in, not the fund itself, so the results over those stretches show how the rules would have behaved, not what the fund returned.
Research data and disclosures
Calculate QQQ RSI(14) and SMA(200) daily. Backtest max drawdown: -76.2%. This is a tactical asset allocation strategy. BestFolio supplies the public rule or approach and backtest context; current signals, allocations, and paid interactive data remain restricted to Pro access. Users review the published signal and place any resulting trades in their own brokerage. Displayed returns remain hypothetical and do not represent a customer's brokerage record. The facts above show how current the data is.
- BestFolio supplies
- The daily signal email and this strategy page; current signals and email alerts require Pro access.
- Customer action
- Review the published signal and place any required trades in your own brokerage. BestFolio does not execute orders.
- Costs and exclusions
- Backtests are net of a modeled one-way transaction cost (10 bps, scaled up to 3x under stress); taxes, fund-expense drift, or market impact are not modeled. No tax, no slippage beyond the stated cost. Methodology limitations
Published result: Engine drift-until-flip-v1, data version 13881824, published 2026-10-01
Is Buy the Dip still working in 2026?
Buy the Dip returned 22.23% over the trailing 12 months and 195.62% over 36 months through 2026-10-01, compared with a full-backtest annualized return of 24.69%. Its full-backtest maximum drawdown was -76.21%. The full sample contains 10508 daily NAV observations from 1985-10-09. These are model results, not investor account returns or a promise. As of 2026-10-01 it is -4.71% below its high-water mark of 2026-06-02, 4 months ago, and its longest run below a previous high was 9.4 years. Recent returns do not establish that the strategy will keep working.
| Period | Return | CAGR | Max drawdown | Observations | Dates |
|---|---|---|---|---|---|
| Trailing 12 months | 22.23% | Not annualized | -14.28% | 252 | 2025-10-01 to 2026-10-01 |
| Trailing 36 months | 195.62% | Not annualized | -14.28% | 754 | 2023-09-29 to 2026-10-01 |
| Full backtest | 844521.30% | 24.69% | -76.21% | 10508 | 1985-10-09 to 2026-10-01 |
Last verified
Common questions about these results
Are these live investor returns?
No. These are the latest model NAV results from the published backtest. A recent date alone does not make a result an independently observed live record. Investor costs, taxes and execution can differ.
Why can a strategy lag for a year?
A tactical model can hold defensive assets during a rally or change positions during reversals. A short window can differ substantially from its full history. Compare cumulative returns over matching dates and inspect drawdowns as well.
How long has it spent below a previous high?
Its last high-water mark was 2026-06-02, 4 months before 2026-10-01, and it is -4.71% below that level now. The longest run below a previous high in the full backtest was 9.4 years. Recovering from a drawdown can take years, and a strong trailing return does not mean a past high has been regained.
Where can I check the signals behind these results?
The Signals tab on this page lists each dated model decision for the selected variant; for Pro strategies they are visible to Pro members. The methodology page explains the backtest assumptions.
Buy the Dip at a glance
Buy the Dip is a tactical asset allocation (TAA) strategy by the Reddit community across US Equity (3x Leveraged), Inverse Equity, Managed Futures, Gold (2x), rebalanced daily. Backtested 1985-10-09 to 2026-10-01 (41.0 years): 24.7% CAGR, 1.04 Sharpe, -76.2% max drawdown, 28.2% volatility.
- Type
- Tactical (TAA)
- Author
- Reddit community
- Rebalancing
- Daily
- Risk
- Aggressive
- Period
- 1985-10-09 to 2026-10-01
- CAGR
- 24.7%
- Sharpe
- 1.04
- Max Drawdown
- -76.2%
- Volatility
- 28.2%
Buy the Dip — Tactical Asset Allocation Strategy
Buy the Dip is a daily strategy from the Reddit community, built on an older RSI dip-buying rule on the Nasdaq-100 whose original author is unknown. The signal rules come from that community version. BestFolio's 2024 version reworks the aggressive and defensive holdings to add some return stacking on both sides (the DBMF, UGL, USMV and ZROZ sleeves next to TQQQ or IEI). It watches QQQ with two indicators, RSI (a 0 to 100 gauge of recent gains versus losses) and the 200-day simple moving average (SMA), and uses separate buy and sell thresholds (hysteresis), so small moves around a threshold do not trigger trades.
It tracks three on/off switches (oversold, overheated and momentum). Each one turns on at one level and off at another, so what the strategy holds today depends on what it held yesterday, not only on today's readings. The backtest walks through every trading day to find where each switch stands.
Buy the Dip: frequently asked questions
- What is Buy the Dip?
- Checks its signal every trading day and trades only when it changes. Reads two indicators on QQQ, RSI and the 200-day moving average (SMA), and uses separate on and off levels for each signal (hysteresis), so small moves around a threshold do not trigger trades. Four regimes: Oversold holds leveraged long; Overheated holds inverse; above the SMA holds the momentum mix; below it goes risk-off.
- Who created the Buy the Dip strategy?
- Buy the Dip was developed by the Reddit community. It is based on Reddit posts sharing an older RSI dip-buying rule on the Nasdaq-100 (original author unknown). BestFolio reworked the aggressive and defensive holdings in 2024 to add return stacking.
- What is the historical return and maximum drawdown of Buy the Dip?
- Backtested from 1985-10-09 to 2026-10-01, Buy the Dip returned 24.7% CAGR with a -76.2% maximum drawdown and a Sharpe ratio of 1.04. Past performance does not guarantee future results.
- How often is Buy the Dip rebalanced?
- Buy the Dip is rebalanced daily. BestFolio publishes the updated allocation signal each period.
- Is Buy the Dip a tactical asset allocation strategy?
- Yes. Buy the Dip is a tactical asset allocation (TAA) strategy: it adjusts its holdings based on market signals each period rather than holding a fixed allocation.
Backtest Performance (1985-10-09 to 2026-10-01)
| Metric | Buy the Dip |
|---|---|
| CAGR | 24.7% |
| Max Drawdown | -76.2% |
| Sharpe | 1.04 |
| Sortino | 1.79 |
| Volatility | 28.2% |
| Calmar | 0.32 |
| Total Return | 841860.1% |
| Backtest Period | 41.0 years |
Every rebalance fills at the signal-day close, net of modeled transaction costs. Followers trade at the next open; the delayed-close line in the Rebalance Frequency Sensitivity card shows the effect of trading one session later. Execution assumption
Strategy Details
- Type
- Tactical (TAA)
- Rebalancing
- daily
- Risk Level
- aggressive
- Variants
- 1
- Author
- Reddit community
- Source
- Reddit posts sharing an older RSI dip-buying rule on the Nasdaq-100 (original author unknown). BestFolio reworked the aggressive and defensive holdings in 2024 to add return stacking
Asset Classes
- US Equity (3x Leveraged)
- Inverse Equity
- Managed Futures
- Gold (2x)
- Treasuries
- Low Volatility
Categories
Further reading
New to this approach? Read what tactical asset allocation is and how it works.
Holding Buy the Dip alongside another strategy? Use the free portfolio overlap calculator to see how much of the two portfolios actually differs.
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