Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

once gold breaches buy at 5215...........E/U looks interesting as well

i've just also shown you how to watch 14 pips get made with us all still dithering on gold confirmation (tee hee)

N

 

[NVP]

in my humble opinion trading is just about creating an endless number of scenarios / Traps that you set for the prices to stumble into .....many many never get "sprung" but the ones that do should be ok (assuming yuor system is a good robust one)

later.......camptown race is 5 miles long.....

oh yeah and G/U trade on !!!!

(sorry customised indicators overulled the gold price) !!!
N

 

[NVP]

gotta go .....thats a messy trade and gold is still not supporting the G/U buy yet.....step out or not I leave it to you .....I would prefer to see gold rising now to keep me in it

later
N

 

[NVP]

retrace time in my humble opinon - get out

N

 

[NVP]

It's about time you made the permanent switch from cotton picking to pip plucking

hey mate.......work in progress....slooooow but in progress !

N

 

[GMP]

Gavin are you making money my friend ?

I was, until my datafeed went down again and I pulled the trade. If I can't watch it on my MT4 charts, I feel too vulnerable - can anyone attest to a free MT demo account more reliable than Alpari? I seem to have had alot of dropouts recently. Today it didn't make any difference thank god (healthy EURJPY profit) but one day it's going to cost me big time. Watching the SB chart just isn't the same now I've got used to keeping an eye on the Correlator.
I see FXPro do an unlimited demo - anyone any experience of that one?
Thanks for any input.

 

[tigloo]

Attached are the trades that my EA took since I told it to look for divergence on EURUSD and USDCHF. They are drawn on a EURCHF chart to make interpretation easier. As you can see, it will pyramid into the trade until it finds an exit point. The first two trades were nice, although the very first one was probably a lucky shot.

The last one is still open and does not really go anywhere.

Either way, the switch to EURUSD/USDCHF got me thinking. What I am wondering right now is: what am I trading anyway? Is it correct to say that going long EURUSD long USDCHF is 2*long EURCHF? Since, what is it that really happens if EURUSD and USDCHF diverge?

My first idea was a) different quotations for the pairs or b) slips in feeds being supplied to us, minor glitches that caused the correlation to break up. But then again, the brokers have no reason to do that, it would cause the traders to drain their pockets. Massively. And, being retail feeds, they're probably well synchronized and smoothened to iron out these glitches. I suspect that for clients like us, it is safe to say that long EURUSD long USDCHF is 2*long EURCHF - minus the spread of course.

Mathematically, if you deconstruct the trades and find a divergence, what happens is that two of the currencies start to move into one direction while the third currency stays put or moves into the opposite direction. Taking a trade then is quite similar to what NVP suggested when I contacted him the first time.

This is why I charted the trades on EURCHF, first, to make it easy but second, to get confirmation whether the direction of EURCHF is really going where I think it is. The last buy signal leaves me a bit sceptical.

Either way, I'll try to mess with NVPs indicators and see where that goes.

Till

 

[alan5616]

I was, until my datafeed went down again and I pulled the trade. If I can't watch it on my MT4 charts, I feel too vulnerable - can anyone attest to a free MT demo account more reliable than Alpari? I seem to have had alot of dropouts recently. Today it didn't make any difference thank god (healthy EURJPY profit) but one day it's going to cost me big time. Watching the SB chart just isn't the same now I've got used to keeping an eye on the Correlator.
I see FXPro do an unlimited demo - anyone any experience of that one?
Thanks for any input.

Hi Gavin,

I use Alpari but, it's disconnect rate is annoying. I find that clicking on "rescan servers" often fixes the problem. However, as a back up I, also, have ODL running. I believe that FXCM is OK too.

 

[tigloo]

I was, until my datafeed went down again and I pulled the trade. If I can't watch it on my MT4 charts, I feel too vulnerable - can anyone attest to a free MT demo account more reliable than Alpari? I seem to have had alot of dropouts recently.

Thanks for the confirmation, I'm trading on Alpari Demo, too and had the same blackout. Thought it was somewhere on my end. The only other I've tried are FXCM, but they kill your demo account every once in a while so I only use them for tests if the Alpari account is busy doing something else.

 

[jrplimited]

Hi N and all else,

Decided to finish early today..... Errm, make that got booted out of markets early today!

GU; First trade sell stop at 51524 clipped by tail of 08:35 bar, price hovered for a few bars then moved down slightly then SL taken out during 09:00 bar for 21 point loss. Second trade sell stop at 51448 hit near end of 09:20 bar and next 09:25 bar reversed and took out SL for another 21 point loss. Two losses on the trot so thats me done and well stuffed on this pair and typically after that second loser, long trade flagged during next 09:30 bar that would have ended up eating into a chunk of those horrible losses.

EU; First trade sell stop at 33142 just filled by 08:15 bar, price moved down, stalled for four bars then 08:45 bar dropped like a stone, stalled again for four bars, moved down again to print 09:15 new local low and then retraced back up to take out TS during 09:35 wick bar for 13 point profit. By now my chart had got itself into a real mucking fuddle so no more trading on this pair.

EG; Had to wait until 09:20 bar for first trade, entered long at 87755 and price immediately reversed to take out SL during 09:30 bar for 15 point loss. Second trade entered short at 87436 on close of 09:35 bar, price dropped a litlle further then ran back up the hill threatening SL within a few points, then rolled over again and slowly came back down, printed 11:00 new local low and then stalled near entry point until 11:40 bar popped up and I took this as a cue to get out of dodge fast on its close for a 9 point loss.

The chop monster ate me up and spat me out in little bits on GU this morning, probably due to my bottom fishing after the early hours sell off, EU was all over the place chart wise after the first 90 minutes or so and EG just struggled to find any real sustained direction, so all in all it was definitely a case of calling roadsde recovery to tow me out of a very nasty car wreck - going to be expensive to repair today's damage.

Trade wel (unlike me; ouch!) and regards,
Simon.

 

[alan5616]

Thanks for the confirmation, I'm trading on Alpari Demo, too and had the same blackout. Thought it was somewhere on my end. The only other I've tried are FXCM, but they kill your demo account every once in a while so I only use them for tests if the Alpari account is busy doing something else.

ODL, also, kill your demo account every month. There is a way to overcome this. Anyone interested in knowing how, send me a PM

 

[NVP]

I was, until my datafeed went down again and I pulled the trade. If I can't watch it on my MT4 charts, I feel too vulnerable - can anyone attest to a free MT demo account more reliable than Alpari? I seem to have had alot of dropouts recently. Today it didn't make any difference thank god (healthy EURJPY profit) but one day it's going to cost me big time. Watching the SB chart just isn't the same now I've got used to keeping an eye on the Correlator.
I see FXPro do an unlimited demo - anyone any experience of that one?
Thanks for any input.

ODL works for me and its never dropped a feed.....they'll keep pulling the damn feed every month though if you dont open an account with them......i handed over 100 quid to open an account and fine ever since......if I ever want to I could drop more in and trade with them as well I suppose

DOH - Alan....just seen that message.....did you persuade them for a freebee !!!??
N

 

[NVP]

Hi N and all else,

Decided to finish early today..... Errm, make that got booted out of markets early today!

GU; First trade 21 point loss. Second trade for another 21 point loss.

EU; First trade for 13 point profit. By now my chart had got itself into a real mucking fuddle so no more trading on this pair.

EG; Had to wait until 09:20 bar for first trade for 15 point loss. Second trade for a 9 point loss.

Trade well (unlike me; ouch!) and regards,
Simon.

commiserations JRP........heres what I saw.....

very early action after 8am GMT was a nice market fall and therefore G/Tag sell....

then G flipped up opening up a potential E/U sell into that weakening tag rise.....

then as the markets rose Tag eventually turned downwards on a real lazy cyclical chopheavy fall bias....and when you get them the GBP will happily eat you up all day as it returned the chop favours !.....the screen (a 1 min ) shows that there was a lot to be made as GBP rose and USD fell.....but where to enter ?......notice the retraces of USD as well ....Yen was even worse !

and Euro won the slowest rise in history competition trying to emulate the swissie

such is life.....such is life......JRP ever considered a career in the commdolls ? :whistling

N

 

[NVP]

Attached are the trades that my EA took since I told it to look for divergence on EURUSD and USDCHF. They are drawn on a EURCHF chart to make interpretation easier. As you can see, it will pyramid into the trade until it finds an exit point. The first two trades were nice, although the very first one was probably a lucky shot.

The last one is still open and does not really go anywhere.

Either way, the switch to EURUSD/USDCHF got me thinking. What I am wondering right now is: what am I trading anyway? Is it correct to say that going long EURUSD long USDCHF is 2*long EURCHF? Since, what is it that really happens if EURUSD and USDCHF diverge?

My first idea was a) different quotations for the pairs or b) slips in feeds being supplied to us, minor glitches that caused the correlation to break up. But then again, the brokers have no reason to do that, it would cause the traders to drain their pockets. Massively. And, being retail feeds, they're probably well synchronized and smoothened to iron out these glitches. I suspect that for clients like us, it is safe to say that long EURUSD long USDCHF is 2*long EURCHF - minus the spread of course.

Mathematically, if you deconstruct the trades and find a divergence, what happens is that two of the currencies start to move into one direction while the third currency stays put or moves into the opposite direction. Taking a trade then is quite similar to what NVP suggested when I contacted him the first time.

This is why I charted the trades on EURCHF, first, to make it easy but second, to get confirmation whether the direction of EURCHF is really going where I think it is. The last buy signal leaves me a bit sceptical.

Either way, I'll try to mess with NVPs indicators and see where that goes.

Till

Till....ouch - my head hurts !!......you need to get out more !

(only kidding):smart:
N

 

[NVP]

back to the cotton.........wheres the songsheet again
N

 

[NVP]

as I leave the E/U looks place to be...be there or be square

 

[NVP]

and i'd look at selling Yen into Usd as thats looking nice if the DJ30 rises

 

[NVP]

take both small scalps and run.....

 

[alan5616]

DOH - Alan....just seen that message.....did you persuade them for a freebee !!!??
N

There is a way. Never deposited any dosh with them.

 

[NVP]

There is a way. Never deposited any dosh with them.

Doh.....!!!!

N