Subtraction between two pair indicatos..does it exist? | Forex Factory

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Subtraction between two pair indicatos..does it exist?

  • #1
  • First Post: Feb 1, 2007 11:20pm Feb 1, 2007 11:20pm
Hi,
an indicator with two inputs....two pairs
for example: eur/usd and gbp/usd....I'll obtain the difference between the pairs.....Or other indicator for spread?
thanks
  • #2
  • Feb 1, 2007 11:30pm Feb 1, 2007 11:30pm
  •  tesla
  • | Joined Oct 2006 | Status: Friendly Neighborhood Programmer | 533 Posts
Sure, it's just a crosspair. In this case it's EUR/GBP.

http://img528.imageshack.us/img528/2299/sswm6.gif
  • #3
  • Feb 2, 2007 12:15am Feb 2, 2007 12:15am
Quoting tesla
Sure, it's just a crosspair. In this case it's EUR/GBP.

http://img528.imageshack.us/img528/2299/sswm6.gif
Hi,
I mean an indicator for spread trading
  • #4
  • Feb 2, 2007 12:19am Feb 2, 2007 12:19am
Is that a strict mathematical constraint? like EURGBP = EURUSD / GBPUSD
or is it just a principal constraint, that EURGBP is roughly/usually/eventually the same as EURUSD / USDGBP ? Isn't there time lags to take into account?
  • #5
  • Feb 2, 2007 7:07am Feb 2, 2007 7:07am
  •  tesla
  • | Joined Oct 2006 | Status: Friendly Neighborhood Programmer | 533 Posts
Quoting ralph.ronnquist
Is that a strict mathematical constraint? like EURGBP = EURUSD / GBPUSD
or is it just a principal constraint, that EURGBP is roughly/usually/eventually the same as EURUSD / USDGBP ? Isn't there time lags to take into account?
There's a triangular relationship between any three currencies. If you have USD and sell them for EUR, then sell EUR for GBP, then sell GBP for USD you'll be very very very very very close to net zero after subtracting your transaction costs. There's no room for arbitrage if that's what you're thinking. Folks with much lower transaction costs than you or I are taking care of that.
  • #6
  • Feb 2, 2007 7:08am Feb 2, 2007 7:08am
  •  tesla
  • | Joined Oct 2006 | Status: Friendly Neighborhood Programmer | 533 Posts
Quoting canados
Hi,
I mean an indicator for spread trading
Please explain what you mean by spread trading.
  • #7
  • Edited 2:32am Feb 3, 2007 1:32am | Edited 2:32am
Quoting tesla
There's a triangular relationship between any three currencies. If you have USD and sell them for EUR, then sell EUR for GBP, then sell GBP for USD you'll be very very very very very close to net zero after subtracting your transaction costs. There's no room for arbitrage if that's what you're thinking. Folks with much lower transaction costs than you or I are taking care of that.
Thanks. Mostly I just wanted to learn something about the landscape, but somewhere in the back of my mind was the thought, that if there is a time lag, say, allowing EURGBP and GBPUSD to move up some amount of time before EURUSD moves up to the correct relationship, then there is a period of time where one could be pretty sure about a long EURUSD trade.

But having thought again about it, I realise it lacks foundation: because how do I know which of the three charts is the "delayed" one?

Though, just for the exercise, maybe I'll put together an indicator to show XXXYYY via ZZZ anyhow. ... just added indicator...
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  • #8
  • Last Post: Feb 3, 2007 8:04am Feb 3, 2007 8:04am
I have read of methodologies that include a sort of technical analysis that will envolve watching for such "lags" over a given session then making subsequent session decisions on what you believe you are seeing in price variance. My thought when i heard such a suggestion was how long would one have to look before recognizing such a pattern, and then how long will the pattern stay valid so you find youself on the proper side of your TA ??

Cheers,
Thom
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