Demonstration trading from Dr.F. - page 3

 
Mislaid:
Equity of the traded basket on the clock plus a constant...

How do you write the equity of the basket? After all, the parameters change all the time. Here is a typical example. We buy EURUSD and sell GBPUSD. Equal lots. Someone believes that this is equivalent to a EURGBP cross deal. Naive people, not trained in arithmetic. And there's a "basket".
 
Dr.F.: One is sure that this is equivalent to a EURGBP cross trade.
Not "equivalent" but "equitivalent" )))
 
Dr.F.:

How can you write the equity of a basket? The parameters are constantly changing. Here's a typical example. A deal to buy EURUSD and sell GBPUSD. Equal lots. Someone believes that this is equivalent to a EURGBP cross deal. Naive people, not trained in arithmetic. And there's a "basket".

Don't listen to them. They are just jealous of you. You're good at maths and everything. The one with the grandmother in the avatar probably doesn't even know the word "equivalent".

They've never even heard of a basket. Backward people. They ain't never held nothing in their hands but a basket.

 
Mischek2:

Don't listen to them. They are just jealous of you. You're good at maths and everything. The one with the grandmother in the avatar probably doesn't even know the word "equivalent".

They've never even heard of a basket. They're backward. They've never held anything in their hands but a basket.


Thank you, colleague, for your participation. If anyone doubts that it is NOT "equitized", here's the deal on M5 bars during the last 2 days:

Buy EURUSD + sell GBPUSD vs sell EURGBP crossover trade.

In the last case, the quoted currency is GBP. That is why, when recalculating the result in dollars, the pound-dollar multiplier (PD) appears. Which is not a constant. Which is one of the reasons of unequivalence.

The zero bar represents the initial bar at the moment of 2 days in the past relative to now.


As you can see the difference is evident both in the form (correlation is only 0.978) and in the result - the red curve is 10% lower than the black one.

If we take the yen as a quote currency, and consider a pair of EURJPY & GBPJPY trades and EURGBP cross, the effect is even more evident, because the yen fluctuated more:

the difference in "equity" would be 30% (R1 reached 1 on the right bar):

and (R1-R2) are values of 0.3.

 
By the way, to return to the subject of "absolute exchange rates", it is clear from the construction shown that the "true value" ("absolute exchange rate") of the yen varied in those two days three times more modulo than the "absolute exchange rate" of the dollar.
 
Mischek2:

Don't listen to them. They are just jealous of you. You're good at maths and everything. The one with the grandmother in the avatar probably doesn't even know the word "equivalent".

They've never even heard of a basket. They're backward. They've never held anything but a basket.

"They've told the world so many times
that flattery is vile and harmful, but it's no use,
And the flatterer always finds a corner in his heart."
 
Dr.F.:


Thank you, colleague, for your participation. In case anyone doubts that it is NOT "equitibles", here's the last 2 days on the M5 bars:


How did you manage to make such progress ? Mathematics ? Yoga ? Diet ?
 
Mischek2:
How did you manage to do so well? Maths ? Yoga ? Diet ?


Maths, bro. Maths. Basics of differential and integral calculus. Relationships between EURUSD, GBPUSD, EURGBP differentials.

 
Dr.F.:


The basics of differential and integral calculus.

Well, I'll google it, maybe I'll get lucky.
 
Dr.F.:

How do you write the equity of a basket? Because the parameters change all the time. Here is a typical example. A deal to buy EURUSD and sell GBPUSD. Equal lots. Someone believes that this is equivalent to a EURGBP cross deal. Naive people, not trained in arithmetic. And there's a "basket".
Easy. You have to learn to count the value of the basket being traded at any given time, for example, in the currency of the deposit. The change in the value of the basket is your profit/loss, excluding the spreads. Yes, also, you don't need differentials for that.
Reason: