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A regular situation that arises in markets looks like this:
Consider two markets with extremely high 'coincident movement' [i.e They tend to move almost tick-for-tick but introduce any lag of note and one market has nothing to do with the other in a predictive context]
Consider two markets with extremely high 'coincident movement' [i.e They tend to move almost tick-for-tick but introduce any lag of note and one market has nothing to do with the other in a predictive context]
Now market A and B both have a relatively large move down [say], then 'something' happens to de-couple the 'coincident movement' between the two markets and market B then goes back to unchanged whilst market A stays weak.
A trader - for whatever reason - may expect;
a. The down move to continue
b. The reversionary play to unfold.
In the case of a. does she sell the weakest market [market A in the above example] or the strongest?
In the case of b. does she buy the market that has already started
a. The down move to continue
b. The reversionary play to unfold.
In the case of a. does she sell the weakest market [market A in the above example] or the strongest?
In the case of b. does she buy the market that has already started
its reversion [market B in the above example] or the market that stayed weak.
It's one of those situations where trader's instinct and 'what happened in the past' are often at odds with one another.
In my experience, as with much else, the market rewards one strategy or the
It's one of those situations where trader's instinct and 'what happened in the past' are often at odds with one another.
In my experience, as with much else, the market rewards one strategy or the
other until conditions are just perfect for the 'Market God' to smite everyone [at the very least the newcomers to the idea]
