anyone help.......

[the blades]

.....please?

I trade stocks and indeces based on momentum. I've recently started to consider Forex (about which I know jack!) as I'm as exposed to the "stockmarket" as I'm prepared to be

I've looked at a strategy of buying into pairs in an uptrend and selling those in a downtrend - each pair being replaced when another overtakes its "momentum".

I've looked at rate of change for periods ranging from a week to 6 months and the results look, well......crap.

Anyhow - my question (so I don't waste anymore time than necessary!) - is their any evidence that a "strategy" such as this has any merit.

Any advice / information appreciated.

UTB

 

[JumpOff]

Hi Blades,
I'm not sure I understand your strategy. Will you give us an example (and maybe a chart?)

JO

 

[nine]

Not only have I never heard of any evidence that such a strategy should have merit but I am not sure I can see a rationale for currency pairs having a rotating momentum that could be capitatlized on in that way. Why not just attempt to achieve some diversification and then trade when there are trends?

 

[the blades]

Not only have I never heard of any evidence that such a strategy should have merit but I am not sure I can see a rationale for currency pairs having a rotating momentum that could be capitatlized on in that way. Why not just attempt to achieve some diversification and then trade when there are trends?

Thanks for the responses chaps,

Basically the "strategy" would involve buying the pair in the strongest up trend and selling the pair in the strongest downtrend. - to open the trades. These positions are then held until another pair demonstrates a stronger trend. Seems a little simple to work, I know - "You get what you pay for" :cheesy:

Having constructed a SS to analyse many time periods, it seems like a blind alley - hence digging for any evidence that it was worth further investigation.


Suprisingly, I have used a similar method "succesfully" with stocks.


Cheers,
UTB

 

[TheBramble]

TB - I may be misunderstanding your terminology, but you say you're buying one pair and selling one pair - you're talking about an FX 'pair' which is effectively just one instrument - right?

Your pair strategy (in the stocks) appears to be the complete opposite to mine. The fact that we're both using our 'strategy' successfully is quite amazing.

I'm typically trading stock pairs in the same sector - the strongest reaching an upper level (of an institutional standard benchmark) the weakest touching its lowest level (of an ISB) - I then counter-trade them against each other once (if) they both react and pullback respectively each establishing a new (short term) trend.

You appear to be trading them both with the existing trend. Also makes sense for me, but only on directional (uni) trades.

Sorry I can't add anything to your FX research on this topic as I'm also fairly new to that area myself, but in the limited investigations I've done into correlations, apart from the obvious, I've not spotted any edges on pair trading the pairs!

 

[the blades]

TB - I may be misunderstanding your terminology, but you say you're buying one pair and selling one pair - you're talking about an FX 'pair' which is effectively just one instrument - right?

Tony,

you're right. If my terminology is a little amateur it's because, I'm an amateur.

To clarify the stock strategy a little, I buy the stocks in an up trend only and hedge these bets against the index by selling an equal value (plus or minus a bit based on a different system).

I used to sell stocks in a downtrend as my hedge and the volatility proved too frightening for me.

Interesting that you're opposing strategy works too. Mind you, the level of hedge I use is also based on a counter trend theory on a much shorter time-scale.


Kind regards,

UTB