Advanced Forex Strategies Part 1 – Tug of War

TOW concept mainly of cross hezhavannya, the pair trade and the double opposition, which use quantitative analysis to develop a profitable trading strategy. TOW – this is one of the strategies Forex hedge fund, which gives the best results by using the automated system opening and closing positions on the basis of current trends and flows in the market. The system is a bid providing for price comparison between two or more markets to capture the temporal distortions in prices that occur when markets get out of the "normal" or essential pricing. This strategy typically uses statistical measures to determine when two highly karelyavanyya markets have moved to the point of difference of the prices above their historical "average price difference" and can signal trading opportunities. After the two markets will be determined statistically "not able", the market is considered a long position, which is considered to be undervalued, while a short position is taken at the same time on the market, which is considered to be overvalued in relation to the first market. This strategy combing the price factor and the mathematical relationships between currency pairs that correlate enough to create hezhirovannuyu position until prices move in the same direction. A good example of the & # 39 is a cross-hezhavanne the euro and the British pound. Despite the fact that these two currencies are not the same, their price movements are similar enough to be used for hedging. TOW has the potential to generate profits through simple and relatively low risk.

TOW signals typically provided proprietary trading systems Distribution / arbitration, which may use different time frames, including vnutrydonnyya, daily and weekly price bars. Orders for termination purposes and losses can be performed within one day, 24 hours a day. A more thorough examination of the comparative price chart should indicate the presence of short-term and medium-term trends in prices, which fluctuate around both sides of their average historical price relationships, which can also be a trend on a long-term basis.

Trade can be based on the expected transition to the price calculated according to the average price (average reverse), or bids can be taken in anticipation of a potential departure from the calculated average prices and to the extreme level of price relationships (average aversion).

TOW with the & # 39 is a market-neutral, that is, the general direction of the market does not affect its win or loss. The aim is to reconcile the two currencies are highly correlated, trading one long and the other short, when the ratio of prices couples disagree "quantity", the standard deviation – "x" is optimized with the use of historical data. If the currency pair back to this is the trend, per capita income, or both positions.