Why do prices move in the same direction but with a lag on correlated instruments? - page 9
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In general in this case the pair trading reduces to making a pair, as in currencies, such as x/y, and then the entire analysis comes down to finding a pair with higher probability of reversal than continuation, i.e. a flat instrument. Therefore correlation can in principle be dispensed with, analyzing 1 synthetic instrument in a different way. In the end one problem can be solved in different ways. (Lkoh/rub)/(rosn/rub)=lkoh/rosn
1. Correlation is not traded - it is useless. Co-integration is traded.
2. do not trade finding a "flat pair" but rather closing the spread between the two assets
1. Correlation is not traded - it is useless. Co-integration is traded.
2. they do not trade finding a "flat pair", but rather closing the spread between the two assets
Didn't notice the highlighting.
For example, on Forts, there is the original instrument Eu - euro, its synthetic counterpart can be made up of Si am. dollar and ED - euro/dollar
And trade natural vs synthetic.
Eu = Si * ED
Added
By the way, on the FOREX, a lot of synthetic instruments can be made up.
Spreads can be made on one pair of assets, and they can be implemented in different ways. In any case, the point at which the probability of reversal is higher than 50% is traded, no matter how you call it, the mathematical essence remains the same, the mechanism that allows you to get a high probability of a successful transaction is sought.
The probability of a reversal cannot be assessed correctly.
That's why the spread is traded - which of the pairs will reverse is not important, the main thing is the cumulative result
And then - if you can correctly calculate the probability of any pair reversal, then ***the need for pair trading at all?
2-bedroom flat in Kiev, payback period ~105 months, just over 4 years. It's not that long, but it's reliable.
But on speculation ..., something will happen, as it did with oil - investors will take it all away and soak it all up.
You amaze me!
In order to buy a flat, you must first earn money to buy it!
Since you are here, it means you are interested in the financial market, do not waste your time on FOREX!
But you are fighting for the stock exchange and futures, but it is a derivative instrument, not the underlying asset, and it is clear that its volume is also smaller. You are not withdrawing from the exchange, this is all tales from the crypt of the early noughties, which to this day replicate fantasists for some reason. The problem is not to withdraw, but to actually earn, and in this sense, the exchange does not have any particular advantage, you would think that this is some gratuitous place with easy profits? Everything is so difficult, there is no difference.
I'm not "stomping" on you personally, and I was referring to Vitaly.
I was not at all going to persuade FOREX people to switch to the exchange.
It makes no sense!
There are just people who understand everything correctly, and it would be a good idea to give them some advice...
Not exactly a story, but whatever.
You can wake up in the morning and the DC is gone and the website is gone. You probably won't argue with that?
Where do you think the big offices, which have been operating for decades, advertised at euro matches and are accountable to state financial commissions, will suddenly go? So much work and huge turnover, to suddenly run away with your couple of thousand quid? And what is the difference between an FCA regulated forex broker and an FCA regulated stockbroker, can you articulate? You just do not need to carry money in "horns and hoofs" and everything will be fine, we do not live 30 years ago: the choice is huge and there is a lot more transparency and information. But you and some other citizens have some very dull ideas about it, as if all brokers are just some guy from the street who has installed a server with a terminal in his garage for free and can wash out at any time. Of course there are about-market cheaters, they will be, so what? All the other companies have nothing to do with it. And your logic turns out something like this: I did not exchange currency in a bank but with an uncle on the market, the money turned out to be fake and the uncle disappeared, which means that the whole currency exchange market is a fraud.
Where do you think the big offices that have been operating for decades, advertised at euro matches, accountable to state financial commissions will suddenly go? So much work and huge turnover to then abruptly run away with your couple of thousand quid? And what is the difference between an FCA regulated forex broker and an FCA regulated stockbroker, can you articulate? You just do not need to carry money in "horns and hoofs" and everything will be fine, we do not live 30 years ago: the choice is huge and there is much more transparency and information. But you and some other citizens have a very primitive notion about it, as if all brokers are just some guy from the street who has installed a server with a terminal in his garage for free and can wash out at any time. Of course there are about-market swindlers, they will be, so what? All the other companies have nothing to do with it. And your logic turns out something like this: I did not exchange currency in a bank but with my uncle on the market, the money turned out to be fake and the uncle disappeared, which means that the whole currency exchange market is a fraud.