Author Archives: Geoff Hossie

TRADE LIKE A HEDGE FUND – Harness the Power Of Technology to Gain Market Edge in One Hour per Day

Presentation by Geoffrey Hossie of Pairtrade Finder to the Marbella Business Institute, 24 February 2017.

An introduction to Pair Trading and Why It Matters To You.

Tip # 3 – Analyze Your RSI Chart

Technical analyst J. Welles Wilder created the Relative Strength Index (RSI) as a tool to measure the strength or weakness of the closing price series of a security over time.  It is a measure of both velocity (speed!) and magnitude (distance travelled) of price changes and can identify stocks that are either overbought or oversold.

The Relative Strength Index is calculated as RSI = 100 – 100/(1+RS). RS (Relative Strength) is usually calculated as the exponential moving average of daily gains/exponential moving average of daily losses during a defined time period.

Tip #2 – Price Ratio Analysis

Pair trading often succeeds or fails based on price ratio analysis, which is the core of the system. The maths are simple: in two correlated stocks what is the ratio of stock A to stock B (price A/price B)? The closer the stocks are in price, the closer the ratio will be to 1. For example, if stock A is trading at \$55/share and stock B is at \$58/share, the price ratio is 0.95.

Watch For Changes in the Current of the Stream: Correlated stocks,