- Why IFCM
- Market Data
- For Business
Geworko Method is for traders who value the availability of large number of trading instruments: investors, who have a vast experience on the market, and have worked out a trading system (mechanical or visual, based on the recognition of some iterative graphical images). The more instruments are available, the more opportunities to enter the market arise. Therefore, the ability to create your own instruments granted by Geworko Method becomes priceless.
The new functional called GeWorko method allows traders to highly expand the range of trading instruments, to create different, absolutely new trading instruments and even portfolios of assets from already existing list of trading instruments. This functional is currently available in the latest version of the trading-analytical platform NetTradeX.
GeWorko method is an innovative market analysis method, by means of which you can create asset portfolios from a variety of financial instruments, available on the platform and determine the price of one portfolio relative to the price of another one. This allows creating a new and unique composite instrument - PCI. The ideology of the method is based on the conception of the traded pair relation B/Q, adopted in Forex market, where the asset B (the base) is traded against the asset Q (the quoted). It is possible to form both a very simple structured composite instrument, where each portfolio consists of one asset, and a very complex one - with a wide range of assets in each of the portfolios. The program allows setting a specific weight to each of the assets in the overall structure. The prices of all assets are automatically calculated in US dollars (if they are expressed in another currency), which allows to correctly compare both portfolios with each other. Chart building on the basis of the previously created PCI takes no more than two minutes.
Let us give a concrete example of how to apply PCI for selecting new trading instruments. In the list of instruments in use there are CFDs on Stock Indices of the USA - DJI as well as indices of European countries including England - FTSE, and France - CAC40. We can trade an index directly as well as build a chart, reflecting changing relation between the indices and trade with that relation. In the charts presented below we have derived the relation of DJI against FTSE and DJI against CAC40.
The prices of all indices have been equaled to 100 000 US dollars.
From a fundamental point of view, the stronger the economy of the country, the more stable and better its stock index should be, compared with a weaker economy.
This hypothesis is confirmed by the information on the presented charts. A stable upward trend is observed on the relation of DJI against the European indices, which is interrupted by rare but rather deep corrections (15-20%). This analysis can assuredly be used as a trading idea, by buying DJI and simultaneously selling any of the European indices, and probably increasing positions on strong corrections.
The fundamental analysis should certainly be reinforced by the technical analysis, and NetTradeX possesses an arsenal of all necessary means. The movement on both charts takes place quite synchronously, which allows for trend continuation or possible correction at earlier stages. At the beginning of 2013 some reversal patterns emerged on both charts, very similar to “head and shoulders,” which signaled about long positions to be closed.
So, the fundamental approach, in combination with the technical analysis, leads to a better understanding of portfolio behavior and explanation of the relationships between various asset combinations. In this regard, PCI, constructed on the platform NetTradeX, is a very effective instrument for people, engaged in active trading, who can create their own instruments, test and apply them.
|Chart 1: DJI against FTSE100|
|Chart 2: DJI against CAC40|