TradersClass

Superior Trading Skills through Education

 
Crude Oil & the Dollar Print
Written by Site admin   
Sunday, 29 January 2017 19:44

Crude Oil and the US Dollar have a long term correlation, it's inverse, so as the Dollar goes up, Oil goes down.

Since Trumps election we've had a break out and bull run in the Dollar and, if as seems likely, there will be a series of US interest rate rises this year, there's more strength to come. So, if the correlation is inverse and the Dollar rises, Crude Oil should fall, right?

WTIDXYJan17

On this chart I inverted the DXY, in red, so withe the correlation they should both be running in the same direction. Problem is, the correlation broke last May. Since then they've moved opposite the long term correlation and have, this month, started to converge again. As the arrows there should be much more of this to come. Either Crude falls or the Dollar strengthens.

 

From the blog

How to be a professional trader

How to be a professional trader

The world we inhabit is dominated by the 80-20 principle.

Vilfredo Pareto changed the way we looked at many things, specifically micro-economics which he linked to social factors which went on to become popularised in recent years. Pareto observed the "law of the vital few". Approximately 80% of the effects come from 20% of the causes.

Nowhere is this more apparent than a glance at the small print at the bottom of every spreading betting website. They are now required to publish how many clients lose - you guessed it, around 80% of their customers lose money.

So, what of the remaining 20% or so?

There are is no shortage of horror stories from the 80%. Many have been there. This article describes the spiral into despair which results from marketing hype and personal hubris, the Superman effect, following modest successes. 

Reality? A recent research report from Psyquation indicated that fewer than 20% become profitable after two years and only 1.2% are successful enough to make trading their career. Sobering stuff for those new to the game, but is it gambling? Thanks go to long term investor Gary Scott for the article below:

Trading and Investing is gambling.

Until we admit this, we cannot invest like the pros. However, once we recognize that every investment is a bet, can we become a professional investor instead of a stock and bond gambler?
The fact is professional gamblers are not really gamblers. They are investing pros who cash in on the imbalances of gamblers. They invest in bets instead of stocks and bonds.

Read more...

Check these links

  • JoomlaWorks Simple Image Rotator