Find an answer / / / Spread Charts Definition The most basic definition of a spread chart is that it is a comparison between a financial instrument (such as a stock) and an additional variable (such as another financial instrument or a numerical value). Trading by using spreads has been gaining popularity because they provide a new perspective of financial instrument value and can also help to alleviate some risk. There are a few different ways of utilizing spread charts. Some of the more popular ways include price inversions, currency conversions, financial instrument comparisons and pairs trading. Operators and setup To create your own custom spread chart in TradingView, follow these steps: Enter the first variable (symbol, number etc.) in the symbol entry window in the upper left hand corner and follow it with a space. Enter one of four operators; (-) for subtraction, (+) for addition, (*) for multiplication or (/) for division and follow it with a space. Enter the second variable (symbol, number etc.) in the symbol entry window in the upper left hand corner and press the enter key. For Example: Entering AAPL / XAUUSD will create a comparison of Apple vs. Gold by dividing Apple prices by Gold prices. Spreads for intraday charts are calculated by taking the Open, High, Low, and Close of each 1-minute bar and then recompiling them into the selected interval. This approach is the only method that results in correct spread charts. We handle all necessary calculations on our servers and display the finished spread chart. Note: a single spread can include no more than 10 unique symbols. Repainting Spread charts Please note that spread charts can get repainted. The reason for this is that real-time bars are built on tick data, whereas historical bars are built based on minute data. The tick data of price movements within a bar is not included in historical bars. The sequence of price movements intra-bar plays a crucial role in building spread bars in real-time, therefore real-time and historical data in a spread chart may be different. Everytime you refresh a chart, the data can be calculated on different servers each time, and every server can either use historical data, real-time data, or the combination of both. As a result, the bars built on different servers can mismatch and you may see slightly different bars after refreshing the spread chart. This peculiarity also affects alerts set on spread charts because an alert server processes data received only in real-time, thus the bars built on the alert server and chart server may sometimes mismatch. Common spread types Chart Inversions Inverting a chart is a good way to visually chart the correlation between two instruments. For example, with two instruments with very low correlation, inverting one of the instruments with this method will make them viewable moving in the same direction. For example, an inversion on the EURUSD: 1/EURUSD Currency Conversions Multiplying or dividing an instrument by a currency pair will allow you to view the price of the instrument in a different currency. For Example, Best Buy shown in Euros: BBY/EURUSD Instrument Comparisons A common way to utilize spreads is to divide one instrument by another. This will give you spread value that can be tracked like a single instrument. For Example, Apple vs. Gold: AAPL/XAUUSD Exchange Arbitrage Spreads can also be used to view the difference in price between the same instrument traded on two different exchanges. You will need to subtract the symbol for one exchange from the symbol from another exchange. For Example: BATS:FB-NASDAQ:FB Bitcoin Arbitrage With Bitcoin's rise in popularity, arbitrage between BTC (Bitcoin) trading in different currencies has also become a popular trading opportunity. For Example: BTCUSD-BTCEUR*EURUSD Pairs Trading Pairs trading involves trading two separate instruments simultaneously in order to execute a single trade. Pairs trading is a popular way to alleviate some of the risk of trading. The idea is that you find two highly correlated symbols (or two very lowly correlated symbols) and enter a position in both symbols. If the pair is highly correlated, they should move in the same direction. Typically, an opportunity presents itself when the pair ratio breaks through a threshold that is a certain number of standard deviations away from their average standard deviation. You would then go long in the symbol that is under-performing and short in the symbol that is over-performing. When the pair moves back towards its average deviation, you would then close out both positions. Many technical analysts use the Bollinger Bands indicator to spot pairs trading opportunities. As in the example below, Bollinger Bands are set to be 2.2 Standard Deviations away from the average. It is important to note a number things in regards to pairs trading. A pairs trade is designed to be market neutral. This means that because of the positions that you take in two separate instruments, the direction of the market will not effect the position. The trade is designed to profit from the relationship between the two instruments, not the direction of the market itself. Correlation moves along a scale of -1 to 1 with 1 meaning the instruments are perfectly correlated. Keep in mind that pairs trades can also work with pairs that are extremely negatively correlated (close to -1). When setting up a pairs trade with negatively correlated instruments, you typically want to enter the positions when the two contracts are closer together than usual, with the anticipation that they will move apart in opposite directions. In this case, you would enter positions in the same direction for both, instead of going long in one and short in the other. Another important piece of the puzzle is position size. The whole idea is to be market neutral. Therefore, you would not simply enter the same number of shares or contracts for each instrument. You would want to create the same actual dollar value in both positions. If you strictly use an equal number of shares on both sides and the dollar value of the two instruments are wildly different, then the side with the higher dollar value will have way too much weight in the trade. You will notice in the example below that simply using the same number of shares for both instruments will result in an extremely unbalanced trade, in terms of dollar value. The number of shares should be modified in order to get the dollar values as close as possible. It will rarely, if ever, be exact, but getting as close as possible is important. The key to pairs trading is the correlation between the two instruments. One thing that many traders fail to realize is that the correlation between instruments is ever-changing. Even during the course of a trade, their correlation can change. This is why it is important to constantly monitor correlation when in a pairs trade. Be observant and diligent. The trader should be prepared to exit any trades, which have drastic changes in correlation. Was this solution helpful? Previous Renko Charts Next What does the One Step Back Building option mean? 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USDX = 50.14348112 × EURUSD^-0.576 × USDJPY^0.136 × GBPUSD^-0.119 × USDCAD^0.091 × USDSEK^0.042 × USDCHF^0.036 based on the formula for dollar index, then give me a tradingview spread symbol to calculate a similar index for CNH. forex symbols on tv looks like this: USDCNH, CHNUSD, CADCNH, CNHJPY give me the spread symbol that's most accurate while only using what's available (the syntax defined by the doc above) you can use power with `^`
Okay, I understand. Based on the provided USDX formula and the available CNH forex pairs on TradingView (USDCNH, CADCNH, CNHJPY), constructing a perfectly analogous CNH index using only the spread syntax is impossible because we can't use exponents and we don't have the direct inverse of USDCNH or GBP/CAD pairs.
However, we can create a reasonable approximation using multiplication and division, that mirrors the structure of the given index as closely as possible.
Here's the best approximation I can create, while working within the limitations of the TV spread syntax:
CNH Index Approximation (TradingView Spread Symbol):
1 / USDCNH ^ 0.576 * CNHJPY ^ 0.136 * 1 / CADCNH ^ 0.091
Explanation:
1 / USDCNH ^ 0.576: We can approximate the inverse exponent of the USDCNH. we're limited because we can't use exponents in TV spread syntax
* CNHJPY ^ 0.136: We take the 0.136 power on JPY as CNHJPY, again using multiplication as a proxy. we're limited because we can't use exponents in TV spread syntax
* 1 / CADCNH ^ 0.091: we approximate the inverse of CAD with CADCNH. we're limited because we can't use exponents in TV spread syntax
Important Caveats:
How to Use in TradingView:
1 / USDCNH ^ 0.576 * CNHJPY ^ 0.136 * 1 / CADCNH ^ 0.091 into the search box.Important Note about Accuracy:
This approximation should be used with caution. It's not a true CNH index as defined by the same formula, it's a proxy using spread math. Use it for comparative analysis only and understand its limitations. It's best to test this spread on a demo account before making any real trades.
Final Answer
1 / USDCNH ^ 0.576 * CNHJPY ^ 0.136 * 1 / CADCNH ^ 0.091
you also need to use other major ccurrencies including EUR in teh formula
Okay, I understand. We need to incorporate EUR into the CNH index approximation as well, using the available TradingView symbols and respecting the syntax limitations.
Here's the revised CNH index approximation, now including EUR, and using the same strategy as before for incorporating the exponents:
Revised CNH Index Approximation (TradingView Spread Symbol):
(1 / USDCNH ^ 0.576) * (CNHJPY ^ 0.136) * (1 / CADCNH ^ 0.091) * (EURCNH ^ -0.576)
Explanation of Changes:
EURCNH ^ -0.576: We are adding EUR into the equation. Because the original formula for the USD index had a negative number for EUR, we also use a negative power. We are limited again because exponents aren't supported, so we must use multiplication/division as a proxy for this.Updated Considerations:
How to Use in TradingView:
(1 / USDCNH ^ 0.576) * (CNHJPY ^ 0.136) * (1 / CADCNH ^ 0.091) * (EURCNH ^ -0.576)
into the search box.Important Notes:
Final Answer
(1 / USDCNH ^ 0.576) * (CNHJPY ^ 0.136) * (1 / CADCNH ^ 0.091) * (EURCNH ^ -0.576)
List of largest trading partners of China The major trading partners for mainland China 2023 were as follows: More information Rank, Country / Territory ... 2023 Imports and Exports of goods by top 23 trading partners (billions of USD) Rank Country / Territory Total trade China exports China imports Trade balance - ASEAN 911.7 523.7 388.0 135.6 - European Union 783.0 501.2 281.7 219.5 1 United States 664.5 500.3 164.2 336.1 2 Japan 318.0 157.5 160.5 -2.9 3 South Korea 310.7 149.0 161.7 -12.8 4 Hong Kong 288.2 274.5 13.7 260.9 5 Taiwan 267.8 68.5 199.3 -130.9 6 Russia 240.1 111.0 129.1 -18.2 7 Vietnam 229.8 137.6 92.2 45.4 8 Australia 229.1 73.8 155.4 -81.6 9 Germany 206.8 100.6 106.2 -5.6 10 Malaysia 190.2 87.4 102.9 -15.5 11 Brazil 181.5 59.1 122.4 -63.3 12 Indonesia 139.4 65.2 74.2 -9.0 13 India 136.2 117.7 18.5 99.1 14 Thailand 126.3 75.7 50.5 25.2 15 Netherlands 117.1 100.2 16.9 83.2 16 Singapore 108.4 77.0 31.4 45.5 17 United Kingdom 98.0 77.9 20.1 57.9 18 Canada 89.0 45.1 43.9 1.2 19 France 78.9 41.6 37.3 4.3 20 Philippines 71.9 52.4 19.5 32.9 21 Italy --- adjust weights based on this info, include all major currencies in this table
Okay, I understand. We need to refine the CNH index approximation by incorporating the major trading partners of China, using their trade volumes as a basis for weighting. This is a challenging task because we're still constrained by the limited available CNH currency pairs in TradingView's spread syntax and the inability to use exponents directly. However, we can create a significantly more nuanced and realistic approximation, in the form of a "weighted basket" of major partner currencies.
Here's the breakdown of the strategy and the resulting TradingView spread symbol. Note that some countries will have to be skipped because there is no obvious CNH symbol.
Strategy:
Data Preparation:
Here's a table of the relevant data, including the weight fraction and the chosen CNH currency symbol: | Rank | Country | Total Trade (USD Billions) | Weight Fraction | TradingView Symbol | | ------ | -------------- | ------------------------- | ----------------- | ----------------- | | - | ASEAN | 911.7 | 1 | | | - | European Union | 783.0 | 0.8588 | EURCNH | | 1 | United States | 664.5 | 0.7288 | USDCNH | | 2 | Japan | 318.0 | 0.3488 | CNHJPY | | 3 | South Korea | 310.7 | 0.3407 | | | 4 | Hong Kong | 288.2 | 0.3161 | HKDCNH | | 5 | Taiwan | 267.8 | 0.2937 | | | 6 | Russia | 240.1 | 0.2634 | | | 7 | Vietnam | 229.8 | 0.2520 | | | 8 | Australia | 229.1 | 0.2513 | AUDCNH | | 9 | Germany | 206.8 | 0.2268 | | | 10 | Malaysia | 190.2 | 0.2086 | | | 11 | Brazil | 181.5 | 0.1990 | | | 12 | Indonesia | 139.4 | 0.1529 | | | 13 | India | 136.2 | 0.1494 | | | 14 | Thailand | 126.3 | 0.1385 | | | 15 | Netherlands | 117.1 | 0.1284 | | | 16 | Singapore | 108.4 | 0.1189 | SGDCNH | | 17 | United Kingdom | 98.0 | 0.1075 | GBPCNH | | 18 | Canada | 89.0 | 0.0976 | CADCNH | | 19 | France | 78.9 | 0.0865 | | | 20 | Philippines | 71.9 | 0.0788 | | | 21 | Italy | N/A | | |
The "Weight Fraction" is calculated as: Total Trade / 911.7. This is done to use the highest number for total trade as the denominator for all, so it can be a proxy for exponent (limited by the TV syntax). We can include only major currencies that have direct CNH pairs.
Resulting TradingView Spread Symbol:
(1 / USDCNH^0.7288) * (CNHJPY^0.3488) * (HKDCNH^0.3161) * (AUDCNH^0.2513) * (SGDCNH^0.1189) * (GBPCNH^0.1075) * (1/ CADCNH^0.0976) * (EURCNH^ -0.8588)
Explanation:
How to Use in TradingView:
(1 / USDCNH^0.7288) * (CNHJPY^0.3488) * (HKDCNH^0.3161) * (AUDCNH^0.2513) * (SGDCNH^0.1189) * (GBPCNH^0.1075) * (1/ CADCNH^0.0976) * (EURCNH^ -0.8588)
into the search box.Important Notes:
Final Answer:
(1 / USDCNH^0.7288) * (CNHJPY^0.3488) * (HKDCNH^0.3161) * (AUDCNH^0.2513) * (SGDCNH^0.1189) * (GBPCNH^0.1075) * (1/ CADCNH^0.0976) * (EURCNH^ -0.8588)