Daily rebalancing. RSI/SMA hysteresis strategy on QQQ with four regimes: Oversold triggers leveraged long; Overheated triggers inverse; above SMA triggers momentum allocation; below SMA triggers risk-off. Path-dependent state machine.

Who created the Buy the Dip strategy?

Buy the Dip was developed by BestFolio. It is based on Custom strategy by BestFolio (2024).

What is the historical return and maximum drawdown of Buy the Dip?

Backtested from 1985-10-09 to 2026-07-03, Buy the Dip returned 22.3% CAGR with a -76.4% maximum drawdown and a Sharpe ratio of 1.00. 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.

Buy the Dip Strategy by BestFolio

Name: Buy the Dip, Backtest Time Series
Creator: BestFolio
License: https://creativecommons.org/licenses/by-nc/4.0/

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.

For lower-risk, diversified strategies, browse the full catalog.

Buy the Dip at a glance

Buy the Dip is a tactical asset allocation (TAA) strategy by BestFolio across US Equity (3x Leveraged), Inverse Equity, Managed Futures, Gold (2x), rebalanced daily. Backtested 1985-10-09 to 2026-07-03 (40.7 years): 22.3% CAGR, 1.00 Sharpe, -76.4% max drawdown, 27.5% volatility.

Type: Tactical (TAA)
Author: BestFolio
Rebalancing: Daily
Risk: Aggressive
Period: 1985-10-09 to 2026-07-03
CAGR: 22.3%
Sharpe: 1.00
Max Drawdown: -76.4%
Volatility: 27.5%

Buy the Dip — Tactical Asset Allocation Strategy

Buy the Dip is a custom daily strategy designed for BestFolio that uses RSI and SMA indicators on QQQ with hysteresis-based state transitions to avoid whipsaw trades.

The strategy uses a state machine with three independent boolean flags (oversold, overheated, and momentum), each with separate entry and exit thresholds (hysteresis). This means the current state depends on the previous state, making the strategy path-dependent. The system walks through every trading day to compute the final state.

Buy the Dip: frequently asked questions

What is Buy the Dip?: Daily rebalancing. RSI/SMA hysteresis strategy on QQQ with four regimes: Oversold triggers leveraged long; Overheated triggers inverse; above SMA triggers momentum allocation; below SMA triggers risk-off. Path-dependent state machine.
Who created the Buy the Dip strategy?: Buy the Dip was developed by BestFolio. It is based on Custom strategy by BestFolio (2024).
What is the historical return and maximum drawdown of Buy the Dip?: Backtested from 1985-10-09 to 2026-07-03, Buy the Dip returned 22.3% CAGR with a -76.4% maximum drawdown and a Sharpe ratio of 1.00. 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 2026-07-03)

Metric	Buy the Dip
Compound Annual Growth Rate (CAGR)	22.3%
Maximum Drawdown	-76.4%
Sharpe Ratio	1.00
Sortino Ratio	1.07
Annualized Volatility	27.5%
Calmar Ratio	0.29
Total Return	368588.4%
Backtest Period	40.7 years

Strategy Details

Type: Tactical (TAA)
Rebalancing: daily
Risk Level: aggressive
Variants: 1
Author: BestFolio
Source: Custom strategy by BestFolio (2024)

Asset Classes

US Equity (3x Leveraged)
Inverse Equity
Managed Futures
Gold (2x)
Treasuries
Low Volatility

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