Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

Part 1 and Part 2 encapsulates so much insight, NVP.
Especially about the amounts of experimentation needed to find something workable.
Its always the way.
I think your comment about traders fixating on just 1-2 pairs reflects the intra-day, sitting-at-screen mentality. I think you have to broaden your TFs before you feel you have the time to look at how other pairs react. (something I twigged when I traded whilst contracting.)
Look forward to reading your ideas.

Hey T

for me i never think about Forex pairs behavior ......thats too complicated to fathom .....I think about Single currency behaviour (Indexes)..........that drives everything for the 7 pairs any G8 currency is part of ...

heres all 8 ....use whatever you need ......remember they are all independent so cannot be scaled togeher if overlaid on same chart .....just patterns and shape and trends

Best Thread - Correlation Trading - Basic Ideas and Strategies

Keep up the good work N cheers Pat .....just doing what i'm doing .....day in day out ....turning up !

www.trade2win.com

so pick a currency and look at its behavior using standard PA and whatever else indicator suits .........once you understand what a currency is doing just follow its signals and add whatever secondary currency works best .....

trading pairs is like putting the cart before the horse - well in my books anyway

N

 

[NVP]

heres an example ......GBP is a big player in the G8 as we all know ......its volatile and it really moves .....like Yen ....in fact these 2 guys are more like twice as fast as all the others in G8 (Hint).......

heres the "G" (GBP) index (from last posts indicators) loaded onto a 5min GU chart ......I dont give 2 shits about what USD is doing mainly in a pair .....its normally dawdling along or rangy during scalp sessions .....if it leans in either direction thats even better for me to play into on something like GBP

so can you see how the lower GBP chart offers a stonking support level bounce ? ....yes they do behave like standard pairs so anything goes ....

however on the upper GU its fallen way down below that support level ......why ? ...........because usd in the pairing was very bullish and pushed GU pair beyond the support level ......so that pattern cannot appear on a standard chart where 2 currencies are blended ...I seek purity with thr use of single currencies

so that trade would have been impossible to see on normal charts ....but t was there if you look

thats what i do a lot of the time - i see things no normal trader can see as they are using the wrong tools

and if used correctly that is a serous edge ......

N

 

[NVP]

one more example on daily's...

GBP tries to retest a resistance level ....but you can see that GU is already below that level ...why ? ....because the unshown USD index is hammering bull driving GU south faster than GBP can handle

To me this is the perfect trade ......much better than the last signal .....i have GBP 70-80% certain to reject at R level and usd already driving GU south ..........no brainer to sell it and make money

"his hands cant hit what his eyes cant see" (mahammad Ali)

N

 

[trendie]

thanks for screenshots, NVP. (I have the correlator on my machine, but not been able to use it effectively, although I do dust it off every now and then, and test again.)

Just to get my head around the GBP index, why does the G.mq4 code use:
EUR=(A1+A2-A3+A4+A5+A6+A7)/7;
if its about the GBP?

thanks
(can't help it, I like to dig into the code)
EDIT: being thick!! its an aggregate of GBPJPY, GBPUSD, ... GBPCAD.

 

[NVP]

thanks for screenshots, NVP. (I have the correlator on my machine, but not been able to use it effectively, although I do dust it off every now and then, and test again.)

Just to get my head around the GBP index, why does the G.mq4 code use:
EUR=(A1+A2-A3+A4+A5+A6+A7)/7;
if its about the GBP?

thanks
(can't help it, I like to dig into the code)
EDIT: being thick!! its an aggregate of GBPJPY, GBPUSD, ... GBPCAD.

if memory serves its just getting all GBP ducks in a row to see a net cumulative price value for all GBP pairs combined .....thats a pretty Basic approach with no sophistication re % movement of each pair etc ..... .....but it kind of works ...N

anything negative will be GBP as secondary currency in pair .....CHF I think ...sorry not in charts or anything at moment as on other laptop

 

[shakespeare515]

Hey NVP! Glad to see you are still updating this thread, KUDOS! Traders like you always giving back to the community is so valuable! I hope others are appreciating what you are doing.

 

[NVP]

Hey NVP! Glad to see you are still updating this thread, KUDOS! Traders like you always giving back to the community is so valuable! I hope others are appreciating what you are doing.

thanks dude .....been doing this on forex since early 2000's so always happy to help ...N

 

[NVP]

this morning has been interesting so far

europeans going well from 6am UK time ...then gbp came off the pace so been waiting for it to come back into bull mode

picked up cable from high 2820s up to 2840s so far .....easy meat on a great pattern resumption (tribal Bull Europeans)

N

 

[cantagril]

Mornin' !

Just wondering how you see the dollar this a.m. To my unpractised eye it would seem to have been ranging around the mean for sometime. ...and just to declare my interest, I'm long USDCAD so I've been looking at how the loonie seems to be gently heading south after the ramp at the end of last month. I have a target of of 68 on the basis that it looks like the loonie might revisit today's low (8h35 ish) and that the dollar stills looks comparatively perky.

 

[cantagril]

Mornin' !

Just wondering how you see the dollar this a.m. To my unpractised eye it would seem to have been ranging around the mean for sometime. ...and just to declare my interest, I'm long USDCAD so I've been looking at how the loonie seems to be gently heading south after the ramp at the end of last month. I have a target of of 68 on the basis that it looks like the loonie might revisit today's low (8h35 ish) and that the dollar stills looks comparatively perky.

Just seen it reached 675 before falling back.

 

[cantagril]

Just seen it reached 675 before falling back.

....and did finally get a fill at 68 having sat on it from 8h00. Not a stellar gain but an interesting experience for me to trade the two halves of a pair independantly (sort of) without much reference to my usual approaches. Must try harder

 

[fibo_trader]

....and did finally get a fill at 68 having sat on it from 8h00. Not a stellar gain but an interesting experience for me to trade the two halves of a pair independantly (sort of) without much reference to my usual approaches. Must try harder

When will you finish DEMO trading, Cherie? You've been at it for a decade already. Perhaps your stop-loss is too tight?

 

[NVP]

sorry guys - crazy few days as one of my consulting clients had a big meeting to prep for with a huge potential customer and i was part of the creative team and indeed attended and lead the presentation yesterday in london

half killed me prepping that ....jees trading is sooo much easier !

anyway will catch up on trading side this weekend ....

N

 

[cantagril]

Hope the day job stress is reducing Yours sounds a lot more interesting than mine - I don't have that much personal interaction but when I do most of my clients are not only stupid but incredibly boring too. The greater part of my time is spent scribbling, or rather,slaving over a hot laptop....that hasn't been fun for quite a while but until either people stop paying me completely or I get muuuuch better at trading then I'm stuck.

Anyway, I wanted to say that I've been taking yourname in vain over on RachelFX' "Let's talk trading set-ups" thread and was hoping that perhaps you'd have time to weigh in to the current discussion on CADCHF et al.

 

[NVP]

Hope the day job stress is reducing Yours sounds a lot more interesting than mine - I don't have that much personal interaction but when I do most of my clients are not only stupid but incredibly boring too. The greater part of my time is spent scribbling, or rather,slaving over a hot laptop....that hasn't been fun for quite a while but until either people stop paying me completely or I get muuuuch better at trading then I'm stuck.

Anyway, I wanted to say that I've been taking yourname in vain over on RachelFX' "Let's talk trading set-ups" thread and was hoping that perhaps you'd have time to weigh in to the current discussion on CADCHF et al.

Hey C - great to catch up ......ok i'll take a look

as an accountant for last 40 years amongst other things there has been plenty of boring times i can assure you !

N

 

[cantagril]

Hey C - great to catch up ......ok i'll take a look

as an accountant for last 40 years amongst other things there has been plenty of boring times i can assure you !

N

Wow!
I think you got me beat there too
Of all the things that might possibly be more boring than churning out dross for academics etc, I think accountacy has to be top of the list.....40 years is way too long. I hope the other stuff you did was more fun

BTW, unless I've added blindness to incompetence, your offering on RachelFX' thread (for which I thank you) doesn't appear to include those graphics.........

 

[NVP]

all there now .......C

meanwhile heres a quick recap of today ..i was a little more active this morning but got sidetracked this afternoon

TODAY

all money going into RED GBP and Flowing out of YELLOW Yen in London morning session ...good luck trading any other pair without those in .....you were trading wrong horses

bit of a kick at around 1.20 UK time ......and since that blip its pretty Slooooooooooooow...GBP still falling off its earlier highs but expect it to kick in perhaps later..as its still Bull for the 2 sessions

have a good one
N

 

[NVP]

nice day in market so far ...........amazing bull push on AUD and NZD has skewed the tribal plays though ......they have gone to around +30 pips so far each from 6am ....not my go to currencies for london session so had me in a quandary at times

These guys do stick generally when in play ....especially AUD as a solid mover ....I like EURAUD at times like these ....try to add a little more spice than the boring AUDUSD pairing hoping Euro is going to eclipse the volatility of USD ....

dont get me wrong - GBP been out to -30 pips at times so a few scalps there for the cable followers .....and if you have the Balls the GBPAUD has been a dream play in hindsight ..........

anyway lets see what US session brings ........USD is flat as pancake so cant get any worse ......and perhaps the AUd/NZD gang will fade as they have certainly lost the bull momo at present

N

 

[NVP]

hey gang..........sorry about lack of posts ....been tied up on other projects ...im actually co-writing a book at the moment and its not all to do with trading ......very interesting project ....but my co writer is now meeting the dreaded beast within me called "im bored and this is too much like hard work - can i go trade now please ? "

anyway shes seen all this before with some other projects so handling it well ...should get first draft out in next week then back to trading normality

N

 

[NVP]

interesting week so far :-

Red GBP went off like a rocket monday .....I hope traders took their fill

Yen is the solid sell so far for first 2-3 days action

Rest of currencies are passengers .....as is so often the case ....remember GBP and Yen are the fireballs of the G8 .....if yuo like your action slooow and boring then avoid them both in pairs ...and avoid CAD as well if you really want to snooze till you lose ........the remaining G5 will be boring to trade but may save you some sleepless nights !

N