Charting Intermarket Spreads as Differences or Ratios
Summary
This indicator description explains how to plot the relationship between two broker-listed instruments in a separate chart window. Users specify each instrument by its broker symbol and can apply a multiplier to either leg. A setting selects whether the displayed spread is the difference between the adjusted instrument values or their ratio. Once plotted, the resulting series can be examined with basic indicators.
The description is a charting tool overview, not a complete spread-trading strategy. It does not define entry or exit rules, discuss how to choose multipliers, or explain contract sizing, currency conversion, or continuous futures adjustments. No historical tests or performance evidence are supplied. A plotted relationship can help with visual analysis, but the page alone does not establish that a spread is mean-reverting, tradable after costs, or appropriately hedged.
Key ideas
- The indicator plots a spread between two instruments in a separate chart window.
- Each instrument is entered using the symbol recognized by its broker.
- Multipliers adjust the contribution of each instrument to the plotted spread.
- The spread can be calculated as a difference or as a ratio.
- Basic indicators can be applied to the resulting series, but no trading rules are specified.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.