Unity Pro: Solving Relative Asset Values and Trading Their Momentum
Summary
Unity Pro estimates relative values for currencies, metals, and other instruments that share a common currency. It relates each instrument’s quote to the underlying asset values and constrains those values to sum to one, then derives the values algebraically. Compared with the earlier Unity indicator, it uses a plain sum rather than squared values. Contract-size scaling helps make plotted values more comparable across instruments.
The indicator can display absolute relative values or changes between bars; a price period of one disables averaging and preserves the stated exchange-rate relationship in absolute mode. Its momentum setting blends changes with acceleration, while standard-deviation bands define dynamic ranges. Suggested uses include line crossovers, zero crossings, moves beyond outer bands, and retracements back within them. The document explains the construction and proposes signals but gives no backtest or evidence of profitability. It also notes that instruments must share a common base or quote currency, limiting which clusters can be analyzed together.
Key ideas
- The indicator infers asset values from exchange-rate relationships and a sum-to-one constraint.
- Absolute-value mode displays relative values, while the alternative mode plots changes between bars.
- A momentum setting adds varying amounts of acceleration to change-based readings.
- Proposed signals include line and zero crossings, band breakouts, and retracements inside volatility bands.
- Instrument clusters must share a common currency, and the document provides no performance tests.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.