Capitalizing on delayed correlation?

[jkplay]

Hi all,

Markets tend to be correlated and movement's in certain instrument spur on moves in others, how quickly this occurs and to what extent these other markets move is a fascinating thing.

Do any of you watch moves in index's or oil and then trade FX or Gold based on how they reacted historically to index/oil movements (or any other instruments)?

Has anybody noticed high levels of correlation of late and adapted this into their trading strategy?

If so, what markets do you have the most success with?

In your view, which markets lead the way for the other instruments to follow, or do you think this changes all the time?

JK

 

[Glenn]

Hi all,

Markets tend to be correlated and movement's in certain instrument spur on moves in others, how quickly this occurs and to what extent these other markets move is a fascinating thing.

Do any of you watch moves in index's or oil and then trade FX or Gold based on how they reacted historically to index/oil movements (or any other instruments)?

Has anybody noticed high levels of correlation of late and adapted this into their trading strategy?

If so, what markets do you have the most success with?

In your view, which markets lead the way for the other instruments to follow, or do you think this changes all the time?

JK

Suggest you look into Sector Rotation.
Glenn

 

[DC STOXX]

Trial and error

The answer to your question is yes there are highly correlated markets where people take profit based on slightly delayed reactions on intra day basis.

To tell you "which markets currently follow which" people would be giving you an edge from which a large proportion of their living is made- to tell you what often does what would take away their edge and make the correlation more efficient and thus harder for the trader to make a profit.

I recommend you hypothesize what market might follow another, then just see if your hypothesis is right or not.

 

[A Dashing Blade]

Remember kids, a high R squared co-efficiant doesn't imply a causal relationship! :whistling

 

[DC STOXX]

But I wouldn't ever just say 'ooh Oil's moved 3%, time to buy x and sell y'

GJ

What are you on about Gamma-thats how all the big traders make £100 a minute :innocent: