Intermarket Trading Strategies

18

Conclusion

I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, nor yet riches to men of understanding, nor yet favor to men of skill; but time and chance happeneth to them all.

-Ecclesiastes (King James Bible)

 

Traditional boundaries of the various marketplaces are coming down everywhere and the interbreeding is almost out of control. In order to prevent the process of aging, it is important to focus on the changing environment and reassess your trading systems and methodology.

There is clear and incontrovertible evidence that the markets are linked to each other. Monitoring these relationships and incorporating them in your trading models can give you a trading advantage. Intermarket correlations, however, change over time and you must periodically subject your trading system to a testing regime that will permit your system to profitably mimic the unknown economic laws that cause these changes.

Although technical intermarket analysis considers only the action of the markets and is not based on any economic theory, the statistical evidence and test results presented in this book and elsewhere, have convinced me that it is a viable technique.

Contrary to popular belief by the non-believers, statistics don’t lie. They can be distorted, bent, misused, and even misinterpreted but unless they are materially altered, which of course removes them from the category of statistics, they tell their own true story in a very clear and understandable ...