Sunday, January 17, 2010

Ratio Charts on Prophet Charts

Prophet Charts recently introduced what Tim Knight knows as a misnomer "Ratio Charts".   It is really more powerful that can do all sorts of arithmetic with any number of tickers.  For now I have mostly played with the ratio aspect.

Example of potential arithmetic:  Since silver historically trades for 1/40th that of gold, you could make a Precious Metals chart, formula (GLD + (SLV*40)).

You can also do ratios on Stockcharts. 

Looking for feedback from you all.   Has anyone found particular ratios that chart well, are fib friendly, etc.  Or perhaps some ratios that are predictive of a move in another ticker.

So far I like the USO / GLD chart, a clear bear flag.   Short Oil Long Gold should be a good "pair trade".  Even if both Oil and Gold go down, Oil should go down faster.

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Insightful and Useful Comment!