Guide · Mean reversion
Does Double 7s work?
Across 375 stocks, Double 7s cut the worst fall on 94%, beat buying and holding on risk-adjusted return on 23% and on raw return on 16%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
Above the 200-day average, buy a close at a 7-day low and sell a close at a 7-day high.
- In when the stock is above its 200-day average and closes at its lowest close of the last 7 days.
- Out when it closes at its highest close of the last 7 days.
Mean reversion plays bet that short, sharp moves tend to snap back. 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.
- It's right often (63% of calls), but check the size of the misses: a high hit rate can hide a few large losses.
- It sits in cash much of the time (holding on about 29% of days), so judge it on risk-adjusted return rather than on matching a rising market.
- It worked best on Micro caps (50% beat holding on risk-adjusted return) and worst on Big tech (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
Double 7s did best against holding in the 2008 crash (+40% median gap) and worst in the 2020–21 rally (−33%). 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 | |
|---|---|---|---|---|---|---|
| Double 7s | +40% | −11% | +12% | −33% | +12% | −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 |
|---|---|---|
| Micro caps | 50% | -0.01 |
| Industrials & rentals | 44% | -0.05 |
| Media & telecom | 40% | -0.10 |
| Real estate | 37% | -0.03 |
| Metals & mining | 29% | -0.13 |
| Sectors | 25% | -0.10 |
| Energy & power | 24% | -0.16 |
| Healthcare | 22% | -0.21 |
| Semiconductors | 22% | -0.11 |
| Industrials & materials | 20% | -0.15 |
| Software & devices | 18% | -0.17 |
| Consumer & retail | 18% | -0.15 |
| Indexes & ETFs | 14% | -0.23 |
| Financials | 12% | -0.31 |
| Big tech | 0% | -0.25 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Double 7s holds 96 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.