Ratio charts in ThinkScript are a technical analysis tool that allows traders to compare the price of two different assets. This can be useful for identifying trends, spotting divergences, and making trading decisions. To create a ratio chart in ThinkScript, select the two assets you want to compare and then click on the “Ratio” button in the chart toolbar. This will create a new chart that shows the ratio of the two assets. The ratio is calculated by dividing the price of the first asset by the price of the second asset.
Ratio charts can be used to identify a variety of trading opportunities. For example, a trader might use a ratio chart to identify when two assets are trending in the same direction but at different rates. This could indicate that the faster-moving asset is about to catch up to the slower-moving asset, providing a trading opportunity. Ratio charts can also be used to spot divergences. A divergence occurs when the price of one asset is moving in one direction while the price of another asset is moving in the opposite direction. This can be a sign that a trend is about to reverse, providing another trading opportunity.
