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 [...]
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 [...]