Guide · Volume & money flow
Does Buff Averages work?
Across 375 stocks, Buff Averages cut the worst fall on 80%, beat buying and holding on risk-adjusted return on 15% and on raw return on 15%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
Two moving averages that give heavy-volume days more weight, 5 and 20 days long. Hold while the fast one is above the slow one.
- A volume-weighted average adds up each day's close times its volume and divides by the total volume, so busy days count more.
- In when the 5-day volume-weighted average is above the 20-day one.
- Out when it is below.
Volume & money flow plays bet that volume shows conviction. The family guide
How to use it
- It trades often (about 17 switches a year per stock), so costs, spreads and taxes eat into it more than the backtest's 0.05% per switch suggests.
- Expect to be wrong more often than right: only 34% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It worked best on Media & telecom (30% beat holding on risk-adjusted return) and worst on Sectors (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
Buff Averages did best against holding in the COVID drop (+20% median gap) and worst in the 2020–21 rally (−28%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Buff Averages | +13% | −10% | +20% | −28% | +6% | −10% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Media & telecom | 30% | -0.21 |
| Indexes & ETFs | 29% | -0.12 |
| Energy & power | 22% | -0.18 |
| Industrials & materials | 20% | -0.22 |
| Big tech | 17% | -0.19 |
| Micro caps | 17% | -0.16 |
| Real estate | 16% | -0.11 |
| Software & devices | 15% | -0.31 |
| Semiconductors | 13% | -0.23 |
| Financials | 12% | -0.11 |
| Healthcare | 11% | -0.24 |
| Industrials & rentals | 11% | -0.15 |
| Consumer & retail | 6% | -0.23 |
| Metals & mining | 6% | -0.23 |
| Sectors | 0% | -0.22 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Buff Averages holds 175 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.