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Is there anywhere I can view spread charts with candlesticks? I am interested in looking at the price action of spreads and seeing if there's anything to it.
Understanding yourself is just as important as understanding markets.
the one on the left looks relatively "normal", exceptionally clean trend stands out and the one on the right is not what I have seen in any product and doesnt look readable but looks like you would just apply a mean reversion strategy. Its hard to make out any clear levels and some of the breaks from the mean look quite erratic, I would have a difficult time figuring out when to exit when a position goes against me.
Understanding yourself is just as important as understanding markets.
The second chart is trading a range which is what you want for pairs trading. Since its a range and you expect mean reversion, a pairs trader would scale in his capital when it goes against him. An ultimate stop could be placed at some multiple of standard deviations from the mean.
Not really. Lost a little bit in spread trading in August, but made it back (and then some) in September. Slightly down overall in 2015 for spread trading.
I'm in a similar situation. I eventually moved into profit this month and watching the May 16 Soybean-Corn spread closely to make sure it doesn't tank on me.
Does anybody here trade currency pairs based on bond/commodity spreads? I have found some interesting correlations but no "holy grail" yet (and apologies to the non-believers for my ridiculous attempt).
I was wondering if anybody here with actual experience could provide an insight. I don't have a great strategy other than ES and I really need to diversify!!
For instance, (Gilt - ^TNX) and 6B would make some sense to me but still trying to find the right conversion factors between Gilt and TNX and 6B...
I have found other relationships but getting it on a strategy that works seems to be the challenge. Mean reversion is apparently not the way to go, maybe a breakout of +/- 1 Std or some conversion with % change of the variables, a good de-trender dunno...