Best Thread Correlation Trading - Basic Ideas and Strategies

[Adamus]

Neil,

I'm vaguely following your thread here and it looks like you're very busy trading with your correlator indicators - I'm not into trading the correlation stuff myself, but I am very interested in the possibility of your correlator indicators telling me when I should watch out while trading several different pairs. Is that a potential usage? Say I had both GBPUSD and EURUSD trades on, would your indicator show when correlation is increasing?

Sorry for not wading through all 66 pages of your journal to look for the answer myself, but it's not the easiest read in one sitting!

 

[GMP]

Interesting looking morning. That Yen spike would've cost me plenty I think - anyone know what was behind that?

 

[GMP]

Neil,

I'm vaguely following your thread here and it looks like you're very busy trading with your correlator indicators - I'm not into trading the correlation stuff myself, but I am very interested in the possibility of your correlator indicators telling me when I should watch out while trading several different pairs. Is that a potential usage? Say I had both GBPUSD and EURUSD trades on, would your indicator show when correlation is increasing?

Sorry for not wading through all 66 pages of your journal to look for the answer myself, but it's not the easiest read in one sitting!

NVP will answer you properly, but I've got those 2 on at the moment, and the corrie is telling me sterling is presently alot iffier as a sell against the dollar than the Euro.

Here's a snapshot - €$ on left, cable on right, € blue, £ green, $ red

 

[NVP]

this was what I was watching (alongside about 6 other hybrid corries running )...a little G/U early doors but not much else

N

 

[NVP]

Neil,

I'm vaguely following your thread here and it looks like you're very busy trading with your correlator indicators - I'm not into trading the correlation stuff myself, but I am very interested in the possibility of your correlator indicators telling me when I should watch out while trading several different pairs. Is that a potential usage? Say I had both GBPUSD and EURUSD trades on, would your indicator show when correlation is increasing?

Sorry for not wading through all 66 pages of your journal to look for the answer myself, but it's not the easiest read in one sitting!

hey mate

load the correlator (use tigloos's new one)

remove all currencies but G and E (perhaps leave U on as well)

set it to 1000/1 - you are now watching real time convergence/divergence with no real ma distortion on all the currencies

thats the simplest one for me re watchign convergence /divergence :smart:
N

 

[NVP]

NVP will answer you properly, but I've got those 2 on at the moment, and the corrie is telling me sterling is presently alot iffier as a sell against the dollar than the Euro.

Here's a snapshot - €$ on left, cable on right, € blue, £ green, $ red

hey GMP.....is that the special slimline corrie version there ?

 

[GMP]

hey GMP.....is that the special slimline corrie version there ?

yeah, nowt added, nowt taken away! (hmm, that doesn't make sense at all...)
Great innit, gold's through the floor, €'s in hot pursuit and I've got to close the trades and get back to work.
Never mind, have a good weekend all - Gavin

 

[NVP]

yeah, nowt added, nowt taken away! (hmm, that doesn't make sense at all...)
Great innit, gold's through the floor, €'s in hot pursuit and I've got to close the trades and get back to work.
Never mind, have a good weekend all - Gavin

you to mate

N

 

[NVP]

hey mate

load the correlator (use tigloos's new one)

remove all currencies but G and E (perhaps leave U on as well)

set it to 1000/1 - you are now watching real time convergence/divergence with no real ma distortion on all the currencies

thats the simplest one for me re watchign convergence /divergence :smart:
N

Hi Adamus

heres my corrie on those settings on a 5mtf (I have 4 currencies on but it affects nothing)

see the convergnce divergence

cheers
N

 

[tigloo]

I'm vaguely following your thread here and it looks like you're very busy trading with your correlator indicators - I'm not into trading the correlation stuff myself, but I am very interested in the possibility of your correlator indicators telling me when I should watch out while trading several different pairs. Is that a potential usage? Say I had both GBPUSD and EURUSD trades on, would your indicator show when correlation is increasing?

Hi Adamus,

if you're serious about trading both GBPUSD and EURUSD then have a look at

http://www.google.com/finance?chdnp...046224&chddm=2291079&q=CURRENCY:EURGBP&ntsp=0

(the link will show a chart of the EURGBP price)

You can see that the pair was moving sideways in a narrow range, this means that in general EURUSD and GBPUSD are highly correlated. If you look for example at mataf.net, you will get a similar impression.

The GBP will probably move more independently from the Euro at the moment due to the financial stability of Greece and the crisis aftershock.

However, if you are trading both GBPUSD and EURUSD, you will usually increase your exposure to the USD. If correlation is meaningful to your system because the spikes in correlation are giving you better trading opportunities, then I would certainly factor it in. If correlation is not meaningful to you, I would restrict my trades to either GBPUSD or EURUSD, whichever pair will provide better opportunities for you.

 

[NVP]

signals are screaming at me to buy U/J......

 

[NVP]

signals are screaming at me to buy U/J......

damn damn damn ....I new it was going to divorce and figured it would be the Yen that fell with the markets faster

my trade wasnt tiggered though....but just watched 15-20 pips on opposite fast move

teehee
N

 

[NVP]

as a result of that move theres been some nice buys on CHF and Euro into USD....

n

 

[NVP]

yen is soooo strong compared to market at the moment......odds are it will converge back to U

 

[NVP]

i'm looking at fast action above 92.52......c'mon

 

[NVP]

here we go...its setting up

 

[NVP]

quick 4-5 pips or stay in for the ride....

 

[NVP]

up to ypu if yuo want to stay....i'm bailing

 

[NVP]

there could be more later but i'm a scalper.....if tag keeps falling now then the yen should fall past the usd ....

 

[NVP]

now the situation is spinning 180 degrees isnt it !....anyway i'm busy now so back later

N