Summary

Based on James Altucher's book Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies & Techniques to Winning Profits (Wiley Trading), this useful indicator is great for pairs traders that would like to trade only one side of a pair. I really recommend that you buy James Altuchers book, or at least check it out from the library. His book describes Unilateral Pairs Trading in depth, as well as several other trading techniques for high profits, and just general trading thoughts that are highly refreshing. The download includes 2 indicators and a bonus showme for buy/sell conditions At this time, the indicator is just for TradeStation, but as you all know, I'll get it into NinjaTrader soon!! NinjaTrader was missing a key function I needed, that I'm having to create by hand.

Screen Shots

Usage

James Altuchers book Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies & Techniques to Winning Profits (Wiley Trading) was my inspiration for the Unilateral Pairs Trading technique that he outlines in chapter 2. I've code up a simple TradeStation ShowMe to indicate buy conditions. You can turn on sell conditions too, but I've got some improvements to do on that half, so don't say I didn't warn you ;) The idea is that when two pairs are trading that are highly correlated ( I use pairs with a correlation value > .85, but that's just me) they will shift out of sequence with each other for short bits of time, and statistically they will "re-converge"

And how do I find 2 stocks that are highly correlated like that? Well, I wrote a program to analyze all the stocks, and compile them into a list, and tell me which ones are highly correlated :) You know, the easy, lazy programmers way!! I used to have it online, but there wasn't enough interest to keep it going. If I was to get a sudden surge in interest, I'd consider putting it back online again.... I might even make it free!! Just let me know if you prefer online, or a desktop app you run at home.

So now that you have a highly correlated pair, how to you apply it to the Unilateral Pairs Trading technique that James Altucher outlines? Well, basically for a long buy, and the ShowMe takes the work out of it, if the standard deviation of some calculated ratios is less then -1.5 (modifiable to suit your trading style) AND the percent change in price is greater than 2%, then you have a buy signal. On the other hand, if you have 1.5 standard deviations and greater than -2% change, then you have a short sell trading opportunity. There is more to it than that, and James Altuchers book is really great to read for insight into how this, and many other, trading techniques work for hedge fund managers

Downloads

Download Unilateral Pairs Trading Indicator (ELD and Workspace)

Happy Trading!

Summary

Using concepts discussed by Tom DeMark, this is an indicator that analyzes intra market relative strength. There are three things taken into consideration to determine the strength or weakness of a bar: the close, high, and the low. Then two markets are compared and are used to identify long term turning points. The author of this indicator (who's identity is unknown), seems to think that you will want to use your own entry strategy instead of this as an entry indicator/strategy

Screen Shots

Usage

The indicator will diverge in plenty of time to the actual turning point, it will identify the strength or the weakness way in advance. You will need to formulate your own system to identify entries. This can also be useful if applied to Advance/Decline charts. If you have any extra details on this indicator, please post a comment below with details

Downloads

Buy Sell Pressure Indicator (ELD and Workspace)

Happy Trading!