novacane32000
331 posts
msg #106171
- Ignore novacane32000 |
5/9/2012 8:20:27 PM
Short GLD
Long NEM
The miners have been beaten to a pulp while gold for the most part has continued to shine until recently.
I think the bottom may be in for the miners so you go long miners and even if they go down your are betting gold will go down harder.
If gold goes up, the miners should surge and you win anyway.
Nothing is guaranteed but I think the risk reward here is very good.
http://finance.yahoo.com/echarts?s=GLD+Interactive#symbol=gld;range=2y;compare=nem;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
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Kevin_in_GA
4,599 posts
msg #106174
- Ignore Kevin_in_GA |
5/10/2012 9:47:10 AM
Based on this chart I'd play it exactly the opposite:
http://stockcharts.com/h-sc/ui?s=GLD:NEM&p=D&yr=0&mn=6&dy=0&id=p85613985034
As the ratio hits the lower BB, you would go long GLD and short NEM. However, metals are strong trenders, so mean reversion does not pan out all that well - note the long upward run on this pair over the last 18 months. In any pair trade, have an exit plan in place if the pair moves strongly against you.
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BarTune1
441 posts
msg #106181
- Ignore BarTune1 |
5/10/2012 5:22:00 PM
Not the greatest trade ..... but could be worse ..... the chart and settings I usually use are as follows:
http://stockcharts.com/c-sc/sc?s=NEM:GLD&p=D&yr=2&mn=0&dy=0&i=t07524982864&r=1336684251072
I normally play the pair at a cross of the 3rd STD and exit at the 1st STD .... a better trade was GFI:AEM which I got into a week or so ago using Pairtrade Finder software.
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BarTune1
441 posts
msg #106190
- Ignore BarTune1 |
5/11/2012 12:29:51 AM
This might be a better trade (long IAG and short AU) ..... a good mean reversion candidate based on my Pairtrade Finders screens ... plus you are playing miner vs. miner where there should be a stronger correlation ...
http://stockcharts.com/c-sc/sc?s=IAG:AU&p=D&yr=2&mn=0&dy=0&i=t09299240092&r=1336710344309
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mahkoh
1,065 posts
msg #106217
- Ignore mahkoh
modified |
5/13/2012 3:29:53 PM
Bartune, I cannot determine your settings for the period lookback from the stockcharts screenshot, but assuming the default 100 day lookback period this trade has been profitable the two previous times it triggered.
http://stockcharts.com/h-sc/ui?s=IAG:AU&p=D&yr=0&mn=9&dy=0&id=p31232669594
Doesn't the ratio making a new multi month low bother you?
Funny thing: the above chart triggers twice, in early and mid December. Switching the symbols I would expect to give the inverse picture, however there is a difference: There is a trigger in early December to open a trade but it does not hit the exit signal a couple of days later like the first one...
http://stockcharts.com/h-sc/ui?s=AU:IAG&p=D&yr=0&mn=9&dy=0&id=p99545470960
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BarTune1
441 posts
msg #106218
- Ignore BarTune1 |
5/13/2012 8:00:38 PM
I am pretty sure the lookback period on the graph was 2 years .... the ratio making a new multi month low doesn't bother in particular. I had run a number of backtests on gold mining stocks in the past and they now show up in a watch list that runs with my Pair Trade Finder software.
It is interesting, as you note, that the inverse chart on Stockcharts is not symmetrical ..... my trading software also produces a number daily as to how many STDs pairs in my watchlist are trading ..... I have noticed in the past that the number the software calculates is not always the same as what is produced on Stockcharts.com charts. However, the number is usually pretty close.
Currently, I am not in the IAG:AU trade - it only showed up as a candidate ..... i just backtested it now ... using a cross of the 2.7 STD as an entry and an exit back at 1 STD, my software shows 71.43% profitable trades, 7 trades, $1,767 total profit (including the losing trades) over the past 3 years.
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mahkoh
1,065 posts
msg #106220
- Ignore mahkoh
modified |
5/14/2012 11:02:32 AM
Bartune, I use PTF and have come across a couple of issues with the software as well. If you're interested in discussing them further elsewhere drop me an email as I don't believe this to be the right platform.
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