Best Thread Correlation Trading - Basic Ideas and Strategies

[tigloo]

Here is the first setup I am waiting for:

JPY is bearish, GBP is bullish. My idea is to trade JPY either against EUR or GBP and go long EURJPY or GBPJPY when price touches support. If it touches support and moves upwards, that should equal the prices on the corrie indicator touching support on the longer timeframe or diverging on the shorter timeframe.

Any comments?

 

[tigloo]

Alright I just lost connection to my datafeed and won't be able to trade in the next two hours. Will probably miss the setup.

 

[GMP]

Here is the first setup I am waiting for:

JPY is bearish, GBP is bullish. My idea is to trade JPY either against EUR or GBP and go long EURJPY or GBPJPY when price touches support. If it touches support and moves upwards, that should equal the prices on the corrie indicator touching support on the longer timeframe or diverging on the shorter timeframe.

Any comments?

Nice theory Till, I'll dig out my FXCorrelator and keep an eye on it.

 

[GMP]

Nice theory Till, I'll dig out my FXCorrelator and keep an eye on it.

Just noticed when I change the colours on it, the little tags don't change to match.
The max/min settings reset when I dropped a couple of currencies out of sight too.
(This is the new Till version I'm talking about).

 

[GMP]

EOD Report on my system:http://www.trade2win.com/boards/trading-journals/91616-icc-forex-system-testing.html#post1107864

Got called away this afternoon Till, so didn't manage to keep tabs on your idea - £¥ popped up for a few more pips, though I suppose it's the sort of thing you'll let run overnight?

 

[tigloo]

EOD Report on my system:http://www.trade2win.com/boards/trading-journals/91616-icc-forex-system-testing.html#post1107864

Got called away this afternoon Till, so didn't manage to keep tabs on your idea - £¥ popped up for a few more pips, though I suppose it's the sort of thing you'll let run overnight?

Nice results, Gavin.

Both EURJPY and GBPJPY are still trading sideways, EURJPY is about to hit resistance. If it bounces, I will verify with the indicator and post here.

 

[tigloo]

Just noticed when I change the colours on it, the little tags don't change to match.
The max/min settings reset when I dropped a couple of currencies out of sight too.
(This is the new Till version I'm talking about).

Hm... MT only initializes the colors when the indicator is put onto a chart for the first time, but then doesn't do anything about it later on. It does change the graphs, but not the labels. Will see if I can fix that somehow.

 

[tigloo]

EURJPY has broken through support, invalidating the trade. Will still watch GBPJPY, but look for other opportunities.

 

[alan5616]

My views on trading with Corrie may be a bit heretical but, I believe that if you have 8 currencies on a correlator, then you can trade any combination of these that you can get quoted.

I have been watching EUR/AUD and waiting for the drop that I felt sure was going to continue, based on Daily Corrie and an imminent close below the shorter tf MAs. It was, already well below it's 200 day MA. I entered the trade yesterday (6 pip spread) and closed it this afternoon for 102 pip profit. I entered a wide SL and walked away. If only it was this easy all the time

 

[tigloo]

My views on trading with Corrie may be a bit heretical but, I believe that if you have 8 currencies on a correlator, then you can trade any combination of these that you can get quoted.

That was my idea, too - start as broad as possible, trade for a while and then narrow it down on what yields the best profit.

It should actually be possible to trade any pairs by using crosses. For example, you could trade CHFJPY by trading both EURCHF and EURJPY, cancelling out the Euro. This works with any other currency, too, of course.

My original thought was: identify the currencies that show the strongest trend against each other, i.e. move fastest towards each other or fastest away from each other, show these in some kind of hotlist and then point and shoot. Ideally, a script should identify which pairs you have available and then automatically create the crosses if the pair you want to trade is not already there.

I have been watching EUR/AUD and waiting for the drop that I felt sure was going to continue, based on Daily Corrie and an imminent close below the shorter tf MAs. It was, already well below it's 200 day MA. I entered the trade yesterday (6 pip spread) and closed it this afternoon for 102 pip profit. I entered a wide SL and walked away. If only it was this easy all the time

Congrats on the trade. Which settings do you use? I am currently testing Neil's recommended 1000/1, but I was thinking that 200/x makes more sense if it shows the currencies in relation to their 200 MAs, because this is one of the standard indicators in TA.

 

[alan5616]

That was my idea, too - start as broad as possible, trade for a while and then narrow it down on what yields the best profit.

It should actually be possible to trade any pairs by using crosses. For example, you could trade CHFJPY by trading both EURCHF and EURJPY, cancelling out the Euro. This works with any other currency, too, of course.

Congrats on the trade. Which settings do you use? I am currently testing Neil's recommended 1000/1, but I was thinking that 200/x makes more sense if it shows the currencies in relation to their 200 MAs, because this is one of the standard indicators in TA.

Hi Till,

Only disadvantage with trading 2 pairs to = 1 is that the spread cost will, usually, be slightly higher.

I use a setting of 34/3 on all tfs, I never go lower than a 5 min chart and tend to make most of my entries off this. However, I look to trade in the same direction as the trend and refer to Corrie for the overall confirmation. I start with Weekly then to Daily, 4 hr & 1 hr, although will not pay too much heed to the Weekly if the others all confirm.

In addition to Corrie, I use 200 EMA, 20EMA and 5EMA plus the Jamie MAs and a 40 period CCI. Throw into the mix trendlines drawn on chart and Corrie and it's quite a mess really. I've, finally, got a set up that I'm happy with, after 2 years of forex trading.

I prefer to take divergence trades off Corrie, because I have found these to be the most reliable. If I see convergence occurring, I will look at the other indicators more as, sometimes, the convergence is not a true reversal but, merely, a pull back before continuing in the original direction. I like to see a trend line break, on Corrie, before considering taking a convergence trade.

Hope this helps

 

[NVP]

My views on trading with Corrie may be a bit heretical but, I believe that if you have 8 currencies on a correlator, then you can trade any combination of these that you can get quoted.

I have been watching EUR/AUD and waiting for the drop that I felt sure was going to continue, based on Daily Corrie and an imminent close below the shorter tf MAs. It was, already well below it's 200 day MA. I entered the trade yesterday (6 pip spread) and closed it this afternoon for 102 pip profit. I entered a wide SL and walked away. If only it was this easy all the time

excellent performance Alan - truly excellent

Everyone use and abuse the corrie as required....we havnt touched the surface :smart:

N

 

[NVP]

Hi Till,

Only disadvantage with trading 2 pairs to = 1 is that the spread cost will, usually, be slightly higher.

I use a setting of 34/3 on all tfs, I never go lower than a 5 min chart and tend to make most of my entries off this. However, I look to trade in the same direction as the trend and refer to Corrie for the overall confirmation. I start with Weekly then to Daily, 4 hr & 1 hr, although will not pay too much heed to the Weekly if the others all confirm.

In addition to Corrie, I use 200 EMA, 20EMA and 5EMA plus the Jamie MAs and a 40 period CCI. Throw into the mix trendlines drawn on chart and Corrie and it's quite a mess really. I've, finally, got a set up that I'm happy with, after 2 years of forex trading.

I prefer to take divergence trades off Corrie, because I have found these to be the most reliable. If I see convergence occurring, I will look at the other indicators more as, sometimes, the convergence is not a true reversal but, merely, a pull back before continuing in the original direction. I like to see a trend line break, on Corrie, before considering taking a convergence trade.

Hope this helps

remember all......on lower TF's a convergence signal will generally be merely the ma catching up with the real price which in effect could be probably flatlining with no movement.....divergence is the only play in my books (although there can be exceptions)....on the higher TF's eg my 1000/1 setting up is indeed up and down is indeed down :smart:

N

 

[NVP]

overnights........

Markets up, tag...down ?

awe cummon Usd .....cant you fall faster than that ?

correlation is looking reasonably good anyway so far

ok look at the 1h on the right .....nice buys on U/J in last 24 hours or so........usd is not really into falling is it ? despite the fact that it should be

unless it finaly caves from market pressure......i would be looking to buy U today if markets start falling

The G6 ?......Euro and CHF are the whipping boys but hey who knows.......that divergence on 1h E/G is getting interesting......convergence being normally stimulated by a tag change in bias

later
N

 

[NVP]

heres extract from my more private charts (5m)

usd still in sell mode.....I would now be starting to eye E and G again re buys as they start to finally show some decent positive bias....cheeky trade already at 6.30am gmt this morning on G/U if you take your signals early

all based on other dynamics as well though :smart:

N

 

[NVP]

hi all

Correlation is screwy at present ......Thought we had a Tag push up after 8am but its not held and in truth markets were also confusing matters ........as I literally speak looks like we could have a tag push south again already supported by markets so look for some G6 buys.....and thats mr GBP by looks of things ...

later
N

 

[NVP]

if TAG does slip into gear south again.......consider a Buy U/J play.....above 93.24 is as good a place as any......dj30 above 11075 would be nice....and dow rising faster than gold would be icing on the cake !

N

 

[NVP]

were in on the U/J ....look for 10 pips......and prey that situation above happens !

 

[NVP]

yes i'm aware the GBP has gone supernova.....i'm watching U/J though !

 

[NVP]

here comes the DJ......we just need Yens volatility to drive down past U now......