This chart (black cont. line) represents the relative value spread between SP500 and the German DAX.
The spread has reached a critical Key Level. The question here is if DAX is so much worse, or in other words SP500 is so much better? I sold this spread, which means I BOUGHT DAX and SOLD SP500 against it as relative value trade.
Either DAX will recover more from this oversold level, or the SP500 has to collapse a lot more.
Anyway, you can put a nice tight stop on the trade in case, and risk-reward from this level is not bad at all if the spread compresses a bit again.
Note: You need to manage and monitor this trade manually. Do not place stops on any legs in advance. The trade idea is a short term idea.
The spread has reached a critical Key Level. The question here is if DAX is so much worse, or in other words SP500 is so much better? I sold this spread, which means I BOUGHT DAX and SOLD SP500 against it as relative value trade.
Either DAX will recover more from this oversold level, or the SP500 has to collapse a lot more.
Anyway, you can put a nice tight stop on the trade in case, and risk-reward from this level is not bad at all if the spread compresses a bit again.
Note: You need to manage and monitor this trade manually. Do not place stops on any legs in advance. The trade idea is a short term idea.