cipherscribe, you didn't get out on the OCT 22 when the ratio intercepted the moving average, and you had some profit. That happen to me alot ! no sticking to the game rules.
No Nick, the attachment is a from stockcharts http://stockcharts.com/h-sc/ui?s=MR:RMD&p=D&yr=0&mn=2&dy=0&id=p15397019185 I used 11 days moving average for the RSI and Bollinger Bands, I think this what Pairtrading Finder uses. I picked a bad pair (CGV:HAL), but today it turned around a little bit, it when up 1.44% but still down 1.68% with real money, however the options I bought are showing a little bit of profit because of the deltas, if you buy options a little bit out of the money if the stock move in your favor delta increases and viceversa, what is a good thing but this need to happen fast or even with a 6 month away options the time decay will kill you, volatility also can go in favor o against you. PAIRS-ARB and FoolsCaps are geting closer ! http://www.wealth-lab.com/Community/VirtualTrading/Rankings.aspx
I've not been able to see how RSI can be used. RSI for the pair is one of the graphs I watch in PTF. But I don't know how to apply it. When RSI for the pair is above 70 or below 30, or rising above 30 and dropping below 70. When the first stock of the pair is to go long, what should I look for in RSI? And if it is to go short? And RSI for the individual stocks. Same problem, but I can get some advice by Googling that. Thanks. Walt B
Hi Walt... If the first stock of the pair is a buy IE: ko/pep ...if KO is a buy , rsi for the pair should be under 30. in other words the ratio is oversold... ko has been weak lately in relation to pep... Nick