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The idea of comparing say, bonds and gold, is very interesting, especially when it's based on the concept that they should move together, and that if one lags, then the market will probably bring it back up relative to the other. Buying the weaker of the pair is an interesting kind of arbitrage, and could well identify some good opportunities.
I hope you will be posting these trades, and I hope they will prove out the concept. It is a kind of discount or value investing, or arbitrage , and not one that I was familiar with. I think it's a pretty cool idea.
Thanks for the info and the explanation.
Bob.
Edit: just saw your ES/ZB/GC post. We were typing at the same time.
For those that have been following along, you will notice that I had two losing days in a row on ES. The total lost was ~$650
Yes, that sucks, but once you get the idea of asymmetrical returns in your head, you will realize that this is just the cost of business.
Yesterday I had a winning day. +$925 or so. That erased all of my losing days and more! Keep your losing days to a minimum, and let your winning days fly!
I just wanted to point this out because a lot of people stop trading if they recoup the previous day's loss. You won't ever move anywhere if you go one step back, then one step forward.
-Yesterday played out how I had expected it to more or less.
-Tested +1SD then dropped to M-VWAP
-We are near the SD once again.
-M-VWAP got bought up
-May see a test of Y-High
Thesis:
-I want to fade Y-High
-If market shows some bullish conviction, I will abstain from taking a trade.
-Played the long side at the open, made a little money, then I realized that the day is going to be a complete repeat of the prior day, so I got in short.
-Scalped around too much trying to get a good entry
-Ended up getting stopped on my runner. I was hoping we would go to Y-VPOC and Y-Close but I ended up flattening before that
ZB:
-Took one tick profit because I was wanting to be done for the day
-I was also afraid of a blast higher due to what I was seeing in the market
-Should have held.... look at the crash....
GC:
-Tried long, got stopped for ~240 bucks then tried long again and made it all back plus some.