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JollibeeNo1Customr69 t1_ixzqcbq wrote

Looks like a great chart for a Pairs Trade (eg long the lower sector, short the higher sector).

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Infamous_Sympathy_91 OP t1_ixzzf18 wrote

Good call.

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JollibeeNo1Customr69 t1_iy050rs wrote

Thanks! Just looked these tickers up on TradingView to compare them on an overlay chart, and unfortunately it doesn't look as clean as your graph though lol. I might need to tweek some things still.

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eddie7000 t1_iy0lu70 wrote

As soon as the charts start to look pretty that's when you know the correlation is over.

Go for the ugly and you'll have a far better strike rate.

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JollibeeNo1Customr69 t1_iy0mxnc wrote

Solid info. Thanks! Do you know a reliable tool or scanner by any chance where I may be able to scan for dollar-neutral pair instruments? Something similar to this picture from Wikipedia?

https://en.wikipedia.org/wiki/Pairs_trade#/media/File:Pair_tool.JPG

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eddie7000 t1_iy0o2xy wrote

Reliable scanner? Lol.

As soon as a scanner looks like it's reliable it stops working.

You're better off figuring out which kind of losing trades you can handle without going batty. ie Lots of tiny losses and one massive winner, etc...

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JollibeeNo1Customr69 t1_iy0t5kx wrote

Maybe if you're looking at little intraday scalp trades on a noisy, unreliable minute chart, but Daily, and more so Weekly, Monthly and even Quarterly chart set ups are quite reliable. Not all of us are looking for quick, "gut instinct", lucky, minute by minute scalps and are quit content to wait and watch the longer time frames and calculate the Discounted Cash Flows for a given company. As for Pair Trading, it is considered a lower risk "arbitrage" strategy by Hedge Funds and used by them precisely for that reason, usually on a Daily chart.

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