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Wyckoff realised the power of Comparative Strength Analysis and used this analysis nearly a century ago! It is as powerful today as it was then and always will be!
Smart traders always do comparisons of the markets they trade to similar or opposite markets and indexes, giving them an edge!
This handy tool can also compare Spreads and Butterflies, Spreads to compare one symbol to another and Butterflies to compare one Spread to another Spread (4 symbols). Spread trading is where one market is bought and another is sold simultaneously. Butterflies is where 2 spreads are traded simultaneously. It also comes in handy for option traders using Spreads, Butterflies and Condors.
The ratio (strength) is plotted as a dotted line with different colors when rising and falling. The solid line is the average of the ratio also plotted in different colors when rising and falling. The average can be set to any length and options available are simple, weighted or exponential. The white lines are the Bollinger band of the Ratio and the settings can also be adjusted. We use a 20-day period and 2 standard deviations by default.
The bar interval of the tool can also be set to a different time frame, on any chart interval (for example comparison on 15-minute basis on a 5-minte chart).
All the above features make this tool a necessity for every smart and skilled trader!
Now also available in a Watch list version. We also added Bollinger bands to the Ratio to make comparisons more powerful and added an option to use Heiken-Ashi candles in the comparisons.
Watch list example:
The first block on the watch list is the Daily chart. The $VIX Comparative Ratio and Average turned up and the Ratio “Crossed” the average up (Green) on bar 0 - the current bar. The $TRAN which normally leads the market has turned down (Pink) and the Ratio crossed the Average 3 bars (days) ago, whilst the ES weakened 1 day ago, with the Ratio and Average turning down and a Cross to the down side, also I bar ago.
You can add your favorite symbols and set as many different time frames as you wish on the watch list. The watch list makes it easy to see the strengths of different markets in one place, without having to scroll to different charts!