Do you need the names of financial instruments to fully analyse and trade? - page 6
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
For example, in the case of building a TS running on linked instruments, where this relationship is determined by the nature of these very instruments....(e.g. DJ and SP; spot gold, forward gold and interest rate; all synthetics with options; etc., etc.) .......
These are FAs. There are mathematically valid connections between the financial instruments mentioned, which can be found without using names.
This is FA. There are mathematically valid connections between the financial instruments mentioned, which can be found without the use of names.
There are "basic" relationships between the instruments mentioned: U.S. funds, the nature of forward price formation, the relationship of the option to the underlying asset. The mathematical relationship between these particular instruments existing at a given time allows the trader to make specific trading decisions.
At the same time, if there is no this very basic relationship between the instruments, e.g., SP and Singapore dollar, no mathematical relationship will help build a reasonable TS.
Whether identifying such underlying relationships relates to FA - I don't think it can rather be called identifying a fundamental fact, which is done once and no longer touched .....
hrenfx:
............
Is it possible to find majors among unnamed fin. instruments. .......... As majors are a non-permanent linear relationship between each other.
...........
Some guys use names of financial instruments in their multi-financial analysis. For example, count MXN index using all pairs of this currency...
Imagine that you are working in a brokerage house which does not have names of financial instruments. For example they are just numbered. You may work with an instrument N1, you may work with N2, etc. There are no familiar names. You also have access to the quotes history for each financial instrument, the margin requirements and the cost of the minimum price change in the currency of the deposit (the name of the deposit currency is also unknown).
Will your analysis become difficult? For example, those who are used to trading EURUSD will not find this name. Which financial instrument will they choose to trade?
For FA fans, the DC is kind enough to provide the numbers of financial instruments that could be strongly influenced by the coming news.
Do you like it?
I do not really care for the names. Names don't play any role in price time series analysis.
Can you identify the majors among unnamed financial instruments? My answer is yes.
Does the nature of financial instruments matter (what market does it belong to, is it real or synthesized by a brokerage company)? The answer is not important.
You do not need the names of financial instruments to perform a meaningful trade or analysis. This statement does not apply to FAs as it is a very subjective concept.
Applies to currency pairs.
Among a number of financial instruments one can find such 2 groups that the relation between any member of the first group and any other member of the second group will be equal to the relation between any member of the first group and any other member of the second group. (I feel like doing some clever stuff at this time of night).
Group1: Group2:
H1 C1
H2 C2
H3 C3
H4 C4
H1/C3==H4/C2
Knowing the ratio, we can find such a symbol among financial instruments, the price of which will be approximately equal to the ratio we have found. Further on it can be called a MAJOR.
So explain (I ask without any trick or criticism), (1) what major is according to your terminology and (2) what the highlighted phrase means (meaning).
Since I have obvious problems with clear definitions of terms, here are the quotes:
What you are talking about, hrenfx, are not majors, but base pairs. There can be many bases. But the general property of any of them remains the same: knowing the quotations of base pairs, one can find the quotations of all other pairs.
Clearly you are calling a "major" a pair that leads its subordinate pairs after itself. But this is obvious and understandable only to you, others use established terms. Hence the misunderstanding.
Since I have obvious problems with clear definitions of terms, I am quoting:
You don't need quotes. Say it the way you understand it yourself. What do you mean by "there can be many bases", "a pair that leads its subordinate pairs after itself"? And what are "subordinate pairs", and what do you mean by "leads the way" and where does it lead?
In reviewing your substantive disclosure, I have come to the following conclusions:
(1) You are starting from one of the basic theses of TA that the price is based on all available information. Consequently, you don't need anything except price to analyse it (except in the case of FAs, and I'll add from me: work with related instruments). If we take this thesis of TA as a starting point, then the question asked about the names of instruments is rather rhetorical, because obviously they do not play any role.
(2) What follows is an incomprehensible passage about majors.
(3) You then refer to your "Recycle".
If you don't explain point 2, the whole topic will be reduced to a free retelling of your own https://ru.wikipedia.org/wiki/Technical_analysis.
Many companies have large analytical departments in which they look for so-called logical links between financial instruments.
I don't have such a department and I don't need it. If there are logical connections between financial instruments, they will be found using mathematical methods. Moreover, the number of connections found with mathematical methods will exceed the number of connections found by all analytical departments put together.
Analytical departments searching for relationships exist only in economic applications. In other fields, connections between non-economic indicators are searched only by mathematical methods. In economics, on the other hand, most of the methods used are conservative methods - analytics.
"Majors" (inverted commas - my understanding) are the minimum set of FI (financial instruments) from the initial set of FI, from which all other FI of the initial set can be obtained by linear transformations. In FOREX, the "majors" are USD pairs, because they are used to derive crosses. In the Fund, for example, the Dow index is not a "major" as it is the result of linear transformations of other FIs.
"Majors" can be defined ambiguously. For example, in FOREX, JPY pairs can also be a "major". And on the Dow, the Dow can be considered a "major" if one FI that participates in the construction of the Dow is excluded from the set of "majors" (which is described above).
Recycle finds the relationship in the set of FIs. Therefore, it can easily find "majors" in the original set of FIs. Moreover, Recycle method is exactly up to par (USD or JPY), unlike correlation methods.
You do not need the names of financial instruments to trade and analyse them fully. This statement does not apply to FAs as it is a very subjective concept.
You are absolutely right. You need 3 components for full-fledged trading: a deposit, BUY and SELL buttons.
...........
If there are logical links between financial instruments, they will be found by mathematical methods.
.........
What kind of methods? By finding QC?
On the majors I see. I agree that if we take JPY as a base, then from USDJPY and GBPJPY major we can obtain GBPUSD cross. It is also clear that in forex there will always be a linear relationship (correlation)........ between the major pairs and the cross.
What does Recycle do? - "easily finds the majors in the original set of FIs". But we have just accepted the thesis that any FI from which all other FIs of the original set can be obtained can be considered as majors. That is, any pair can be either a major or a cross, depending on what we take as the basis. Accordingly, there will always be a linear relationship between any pairs (actually, there is). So what then does Reciprocal do?
Recycle is not designed to find "majors". It's just that one of its properties is that it is easy to find correlation links. You run it on three "majors" and look at the numbers. Then run it on the "majors" and some "cross" associated with the "majors". And see where it goes.
Then it will become clear how to find any set of "majors".
The correlation and regression analysis techniques are relatively good, but there are some criticisms of them in another thread.