Developing A New Strategy: SC Ratio
Posted: Thu Apr 28, 2022 12:34 pm
I've been watching the S share price to C share price ratio as it has had huge swings over the past two years, and I think it can be used as a viable trading strategy for folks who are generally holding long term.
The S share price is at it lowest compared to the C in years (although nothing beats the March 2020 plunge). I have been increasing my S purchases as we have seen this ratio plunge, but I am gaining more confidence in the ratio and would like to commit more heavily to basing my trades on this ratio.
Currently my thinking is that the S usually $9-10 higher than the C in share price (total history average is $6.7, recent average is much higher), it can climb as high as $26. Right now S is only higher than C by $5.05.
The attached graph is (S - C)/C to find the price difference ratio (it mirrors S/C but at smaller numbers). I want to work out triggers in this ratio to (1) go all in on S (maybe when the ratio cross 0.21), Sell S for C (maybe when the ratio crosses 0.3) and when to sell all and move to G (when the ratio crosses 0.385). These triggers would override my other trading strategy when they apply.
Thoughts, suggestions, and critiques are appreciated!
The S share price is at it lowest compared to the C in years (although nothing beats the March 2020 plunge). I have been increasing my S purchases as we have seen this ratio plunge, but I am gaining more confidence in the ratio and would like to commit more heavily to basing my trades on this ratio.
Currently my thinking is that the S usually $9-10 higher than the C in share price (total history average is $6.7, recent average is much higher), it can climb as high as $26. Right now S is only higher than C by $5.05.
The attached graph is (S - C)/C to find the price difference ratio (it mirrors S/C but at smaller numbers). I want to work out triggers in this ratio to (1) go all in on S (maybe when the ratio cross 0.21), Sell S for C (maybe when the ratio crosses 0.3) and when to sell all and move to G (when the ratio crosses 0.385). These triggers would override my other trading strategy when they apply.
Thoughts, suggestions, and critiques are appreciated!