How interconnected are markets
- Thread starter 931
- Start date
Stock futures, which is comprised in the index, are very connected. Bad open in Europe index futues and the SPX future (ES) normally will follow.
Forex isn't very connected. It bounces around all over the place. The only thing connected in Forex is the base currency. Technically it trades against say 20 currencies (its more) and this is 20 different instruments however it will produce the same graphs. Because any differences will get arbed out by mega bank super computers.
Forex isn't very connected. It bounces around all over the place. The only thing connected in Forex is the base currency. Technically it trades against say 20 currencies (its more) and this is 20 different instruments however it will produce the same graphs. Because any differences will get arbed out by mega bank super computers.
Forex correlations appear to change alot troughout time , some reach 95%+ but most seem more loose.Forex isn't very connected. It bounces around all over the place. The only thing connected in Forex is the base currency. Technically it trades against say 20 currencies (its more) and this is 20 different instruments however it will produce the same graphs. Because any differences will get arbed out by mega bank super computers.
Could there be some room for regular market participants with regular computers also or all oppertunity scalped away with rigged systems?
In this sample the correlations look very strong.
What factors can cause it to look like this?
If feeding algo with multiple instruments is there some hope for finding relevent info for targeting specific instrument?
Last edited:
Yesterday, I was looking at USD/CAD and WTI. I noticed that the currency pair is going to be break on the upside because it had good bullish momentum. That implies that oil should be shorted.
But something funny happened ...........Oil retraced more than half the bearish move!
That's when I analyzed both usd/cad and oil and decided that if the current price does not hold, then there is a large bearish movement about to happen and if it does hold, there will be no bullish move because the overall trend for that day is downwards. So, I shorted oil after looking at a few candles. I turned out right.
Markets are correlated but not in a way most people think. The relationships are complicated.
Alot of things are correlated or interrelated or somewhat predictable -- you'll notice or pickup these subtle things by just observing the market for a really long time...and with an open mind too;
Last edited:
Inter connectedness is one thing but is also not guaranteed. That's why many a times strong solid structures, price patterns etc. suddenly crumble and market goes in the other direction.
My conclusion is that markets are both systematic and random. Hence one cannot win all the time. Takes us all back to the old saying about the markets..........There is no Holy Grail.
Cheers!
My conclusion is that markets are both systematic and random. Hence one cannot win all the time. Takes us all back to the old saying about the markets..........There is no Holy Grail.
Cheers!
John Murphy; Intermarket Analysis : profiting from global market relationships. Some good examples, old book get it used low price good info