Saturday, April 24, 2010

Q & A session – follow up

We got few questions in Q & A session and I would like to use this space to reply:

1. When it comes to neural networks and trading my knowledge is limited to just being aware that there are numerous sites which are pointing to literature and various resources which cover field of neural networks and trading. If readers of this blog would like to share more on this subject, including good Internet sources as starting point for the research, please share in comments section of this post.

2. Stop loss was posted and re-posted on twitter. I’ve introduced small change, so in white section on the right hand side (Last twenty trades) Stop Loss level is going to be indicated at all times (in bold).

3. And as reader Stan pointed out, two valid choices for ALSI data feed are eSignal and HiSat (local source).

As always, I remain open for any comments/suggestions/ideas that might make this blog better.

In addition, I will keep on encouraging readers to join the conversation, so Q & A session will be re-introduced from time to time.

Trade with trend.


RockTzar said...

Hey there, Alsi Trader!

Thanks again for the interesting blog, this Q&A feature is a great idea. Unfortunately I missed the opportunity to ask something, but perhaps you wouldn't mind answering another question here?

I'm curious as to why the correlation between our markets and the US Dollar seems to have diminished lately. I've noticed the Top 40 seems to follow trends in US Dollar Index, which would make sense given our largest sector, the Resources, sell their product in US$.

At a stage, most world equity markets including the American were correlated to Dollar strength, any idea why this relation phases in and out? Further, are there any other correlations I should be aware of?

Thanks for your time!

Alsi Trader said...

Hello RockTzar

I am not sure that we can assume linear correlation between US$ and Top40. I’m not an expert and I haven’t done any research on this issue, but what I saw over last 5-6 years is that this correlation is ever changing, like everything else in the market for that matter. When I started trading somewhere is 2002, there was very strict rule that when ZAR weakens market moves up because of dual listed companies and, as you know, they are the biggest part of Top40 index.

Then, after reaching that peak USDZAR started to drop (ZAR strengthened) and we had massive bull market. That was due to foreigners buying out equities and bonds.

After that risk appetite diminished, deleveraging process started and Top40 recorded 50% drop in 9 months. US$ was getting stronger and USDZAR was dropping, and if we followed an example from the beginning our market should jump up because of dual listing of companies.

Currently we have situation that Top40 is going up, USD is getting stronger, but at the same time USDZAR is weakening (ZAR getting stronger). This looks like first case of this nature in last 6 years. It could be, as big cleaver guys say, this is because of carry trade, where people borrow money in low interest rate countries and invest it in high interest rate countries. Carry trade existed for many years between US and Japan, as money was borrowed in Japan and invested in US. Currently that is out of the question because spread between rates in US and Japan is not attractive anymore.

As I said earlier, I’m not an expert on this matter and all above is just my personal experience from observing markets over last 6 years of active trading.

Thank you for continued interest and for positive comments about blog.

Anonymous said...

Hi - any suggestions on where to trade ALSIs? I do this through Global Trader but they just announced an increase in fees and I am considering moving. However, they allow you to trade in 'minis' or 1/10 of SAFEX contract, which is very nice.

Alsi Trader said...


You could look at DWT or Cortex. They use OTS (with some limited charting tools available) as the platform and as far as I know they do provide minis as well.

Two valid choices for ALSI feed (if OTS chart is not enough) are HiSat (local source, to be pulled in MetaStock as their charts are not as good) and eSignal.

Hope this helps.

Anonymous said...

Thanks, I appreciate your comments. Have known Cortex for years, but never traded with them. Will look into DWT a bit.

Thanks a lot