Best Thread Correlation Trading - Basic Ideas and Strategies

NVP said:
hey all

slooooow start for me .............a little rusty

usd has been bull from 6am so far ......eased off and coming back bull again now from 9am

europeans are the sells .....so im working GU EU and UCHF mainly

I could have chased the NU and AU off the recent fade of the usd but i'll stick to Bull usd plays at moment

nothing to strenuous or risky so far

N
Click to expand...

chasing a bull us dollar again has worked well this morning (y)

the GU has now worked down to 3550's from the 3590's since my last post so plenty of pips if you got the timing right !

EU finally breached the 2030 levels (from 2040s when i was looking earlier ...and now been down to low 2000's so no complaints there either for scalps !

Uchf buys also came out of 9720's from earlier to hit 9760's so far !

no complaints here as i warm up nicely today :smart:

my strengthmeter based systems (Red pill !!!) always make it real for me .......

N
 
Last edited:
NVP said:
...Apologies for political incorrectness below - I have tried to enliven what is a pretty “dry” post....

Meet the family

Sterling (Red)
Volatile little varmit, mainly “hates” (ie negative correlation) the Yen and USD$
Not absolute friends (ie positive Correlation) with anything else (in my humble opinion) perhaps is more friendly and runs with the European Currencies than anything else – but much more Volatile so don’t get bitten !
Non Forex-wise any relationships it has are probably due to its negative
correlation to the USD$ and the Yen – so refer below to those comments

Euro (Blue)
Lower volatility than most again I would say, primarily “hates” (ie negative correlation) the Yen and USD$. Its best chum (ie positive Correlation) is the Swissie and they go most places together in my opinion.
Non Forex-wise any relationships it has probably relate more to its Negative correlation to the USD$ and the Yen – so refer below to those

SwissFranc(Grey)
All said above in the Euro comments …Swissie (in my opinion) demonstrates
lowest volatility levels of all the Majors most of the time…useful for trading against higher volatility currencies

AUS$ (Gold)
Gday mate…….It cant stand the USD$ and the Yen, and should party a lot with its neighbours (NZ$) but seemingly not enough as you would trade reliably on … loves to party hard with high interest rates on offer compared to the other Majors.
Non Forex-wise …….“loves” Gold (positive correlations) but enough to trade reliably on (?)

NZ$(Lightblue)
Same relationships as its neighbour above…..is also fond of high interest rates…….

YEN (Yellow)
Volatile and mainly “hates” all currencies (ie negative correlations) except the
USD$, which generally moves in the same direction (but US$ is generally less volatile). People sell it in perceived times of greater risk/opportunity as it has the lowest interest rates out there....then they can buy high Yielders (AUS$ and NZ$)
Non Forex-wise It “hates” (negative correlation) most Stock indices and Commodities. Traders sell Yen (the carry trade) to buy these (and Vice versa)….watch it against the US Stock Indices for closest (negative) correlations


CAD$ (Brown)
Difficult to pin this one down - except moves generally negative to US$ and Yen
Non Forex-wise …….“loves” Crudeoil (positive correlation) but enough to trade reliably on (?)

USD$ (Green)
The “Daddy” whether the rest of the unruly forex family like it or not !.

“Hates” all currencies (ie negative correlations) except the Yen , which generally moves in the same direction (but the US$ is generally less volatile). People sell it in perceived times of greater risk/opportunity (its the major holding reserve currency for most countries) Counter-wise traders will buy it as a safe haven when they are dumping everything else and risk appetites are falling……commonly dumping the high Yielders (AUS$ and NZ$)
Non Forex-wise It “hates” (negative correlation) most Stock indices and Commodities. Watch it against Gold especially for some great (negative)
correlation Plays...
Click to expand...


I'd be interested to see how you would change this now after 8 years have passed.
 
hey Nowler - and thanks for posting

surprisingly a lot still holds true after several years have passed ..........will go into a little detail when i get time ...........

its me thats adapted and evolved (as all traders must).....the markets just keep on rolling

N
 
NVP said:
chasing a bull us dollar again has worked well this morning (y)

the GU has now worked down to 3550's from the 3590's since my last post so plenty of pips if you got the timing right !

EU finally breached the 2030 levels (from 2040s when i was looking earlier ...and now been down to low 2000's so no complaints there either for scalps !

Uchf buys also came out of 9720's from earlier to hit 9760's so far !

no complaints here as i warm up nicely today :smart:

my strengthmeter based systems (Red pill !!!) always make it real for me .......

N
Click to expand...

fun still running ....GBP selling hard still in early us session.....and usd still bullish mainly

GU been down to 3490's now ....so 100 pips south of where i started scalping it ............2018 going well already :smart:

N
 
actually ucad is a better buy but gu has been a solid earner so far
 
usd fading a little so cant be fussed to chase GU sells or Ucad buys now
 
will take a look at 4.30 bar then call it a day ....

lets see if usd can get bull again and perhaps some selling on euro , cad , even CHF

N
 
still a little on GU in game .....3521 and fighting hard for more bull pips
 
6 pip selloff by usd this half hour bar .........enough to keep any usd pair scalp trade in the game
 
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