Thinking and Examining Investing Strategies
One recommendation that I have seen quite often is the use of overlayed charts of correlated pairs. The idea is pretty simple: you put the pair (e.g. AUDUSD and NZDUSD) on a single chart. If the charts are at first separate but later joined, you enter a trade with the assumption that the since the are [...]
As discussed in part 1, underlying any correlated pair of currencies, there is a correlating currency that correlate the two in the pair. An example used in part 1 is the pair GBPJPY and USDJPY. They are highly correlated, and the underlying correlating current is GBPUSD. Correlation investing strategy says that you can buy or sell GBPJP [...]
Many years ago I was introduced to the concept of correlation and its use on Forex. I tried it and frankly had some success with it. Basically I picked a pair whose price actions correlated well with each other and trade them simultaneously as if they were one entity. Most of the time the prices [...]
In this article we are going to look at some common uses of momentum oscillator, specifically the Rate-of-Change (ROC) oscillator. The use of Relative Strength Index (RSI) is similar and will not be disccused here. As in the case for moving average, we will try to examine each case by “translating” the statement into English [...]
In order to succeed in any investment or trading, be it buying a security or opening a restaurant or having a share in a local ice-cream store, you have to know exactly what you are doing instead of simply relying in a number of a set of numbers. In this article we are going to [...]
Charts showing how moving averages look when price is increasing, decreasing, or changing direction. Fallacies and proper interpretation mentioned.
This is a 6 month daily chart of a stock. It is recent (up to yesterday). The 15 day 30 days moving averages are also shown in the chart. The vertical grids show months starting from Feb. 2010. There are a couple of nice crossovers… as nice as those usually shown in textbooks or articles [...]
If you have read any of my posts on moving average, you know I dislike or discourage the use of moving average in making decisions. In this post I will discuss a use of moving average which I consider reasonable because it is using moving average (a chart of past data) to get a feel of what [...]
In my previous post I talked about the logical fallacy of using moving average. Basically it goes like this: if it rains, the ground gets wet. A wrong conclusion is made if one says if the ground is wet, it is raining or it must have rained. In using moving average, the fallacy is even [...]
I will start my first blog on moving average, which I think it is a much abused and misused indicator. If you have read anything on moving average, you must have noticed that most authors tell you that it is a lagging indicator, i.e. it only tells you what has happened in the past. Yet most author [...]