Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

Re: Gold/Oil Ratio - Ashraf's take

There is also some interesting stuff about corporate bond yield spreads, and government bond yield curves and yield spreads. Tricky little blighters those, and I can't say I have fully got my head around them, to be honest. However, Ashraf has convinced me of their importance, and I feel that if one could really crack them open, one could trade Bunds (and other bonds) profitably, for example. I know some people trade them technically, but I couldn't make it work for me, so I gave up on them.


*["Currency Trading and Intermarket Analysis" © 2009 Ashraf Laidi ]
[ Excerpts reproduced without permission ]

dont go there M............the bond traders are a strange race who live in caves and work in fractions still

N

 

[craigmac]

Then I shall hurry!

Here is an updated version, please test it with your brokers.

Is their a problem with this? Im having trouble saving it.

 

[montmorencyt2w]

Re: Gold/Oil Ratio - Ashraf's take

hey M

have to be honest and say percieved correlations beween oil and gold leave me a little cold....and theres a fine line in this business between spirited hypotheses and mental mast*rb*tion** :whistling

Well, in his favour, the book lays out a fairly complete history of the relevant events, with charts, basically from around Bretton Woods to ~2008. I suppose you could say that his explanation for the observed events is only one hypothesis, but some of the graphs at least are quite striking, i.e. in highlighting correlations, or at least, associations.

the Gov bond yields are interesting though and reflect market perspective on the value of the currencies of countries concerned

Something I hadn't noticed on previous readings that I only just noticed was corporate bond yield spreads (spreads between high-yield corporate bonds and US bonds of the same maturity.) It is apparently one of the indicators of risk aversion and correlates well with the VIX. i.e. when conditions are growing uncertain, and there is more risk of the bond defaulting, then the yield has to go up to compensate.

naturally the Euro Country yields are VERY interesting and the spread on the lowest yielder (duh germany) vs the high yielders (whoever is rioting at the time) is always a nice indication on how messy the Euro is gonna get.

One of Ashraf's more impressive calls was the long fall of the euro in 2010, which he first talked about (I think) in 2009, and repeated consistently, before anyone else that I happened to notice. I seem to remember this was partly based on yield spreads, and partly on Commitments Of Traders, and probably a few other things, and he usually threw in a few technical indicators. Anyway, I made money on that. Unfortunately, at least as far as I could see, he didn't predict the turnaround half-way through the year, and once it had happened and was obvious to all, he didn't offer any explanation that I noticed. I was a bit disappointed about that (the lack of explanation). Some of his gold calls were also a bit mixed. He's definitely not infallible. But as I always say to people about him: the calls aren't important really. What's important are the reasons he gives. If you agree with this analysis, fine. If you can see flaws in his analysis or are aware of factors that he hasn't taken into account, then you make your judgement accordingly. The other important thing is that he can make you consider things that you might not otherwise have thought of, left to yourself. Anyway, I think a period of silence on my part would be most welcome especially on this subject.

 

[NVP]

heres me doing nothing earlier..............

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at:

 

[NVP]

hey M

theres no doubting the guys intellectual ability

is he a successful trader ? and what does he use technically (apologies if i missed this )

N

 

[montmorencyt2w]

hey M

theres no doubting the guys intellectual ability

is he a successful trader ?

Now there's a good question. Although I've paid for and viewed one recorded Webinar (him and Chris Lori), and thought it was good (it was by no means expensive), that one didn't include any trading. It was just talking/teaching.

However, there was another session, that one could have "attended" online, that included live trading. I couldn't make it for one reason or another (I think that one was free). I didn't get a clear picture of the days events, but I got the impression it hadn't been all that impressive. I don't think this one was recorded or if it was, I never had a link to it. On the other hand, most of his advice seems to be geared at the longer term trader, and I think he's not afraid to use large stops ... or that you should use large stops He never calls specific trades as such. Just direction and broad targets (or probabilities of various targets); hard for me to describe really. He's also a very active tweeter, which I guess is by definition more short term stuff. I followed these for a bit last year, but it's not really my style, and I haven't bothered so far this year. Bit of a distraction really.

I think in real life he's more of an investor than a trader. I think he's talked about buying ETFs and physical gold, in the past.

and what does he use technically (apologies if i missed this )

I guess mostly trend lines, and a few favourite moving averages (he's very fond of "death crosses", or conversely "golden crosses"), support and resistance, and occasionally he will bring up a stochastic; possibly MACD, can't remember. I don't think he is a particular candle-pattern fetishist, but there might be the odd mention. It's not too over-the-top, but he certainly either believes in, or gives the impression he believes in, TA as well as Fundamental/Intermarket A.

 

[NVP]

hmm interesting........thks M

at least it sounds like hes a solid guys and no mega robot android pip slayers are on offer

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[NVP]

aussie D did warm up more overnight but dow was retracing back..............

hey nothings perfect in this game :smart:

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[NVP]

heres the week viewed on a 500ma delta 1 setting........

I use this version to set key S & R levels, overbought/oversold and price action confirmation (HH/HL or LL/LH on a currency)..........5 mins here but works on any TF

the arrow settings now tell you exactly whats happening in trend terms on the 5mins

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[NVP]

................and here is the same period on a 1h chart with our standrd 80ma and 20ma settings

same period but different information on offer :smart:

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[NVP]

market is very thin today ...........NFP days can be a little flat or 1,000 other reasons

N

 

[NVP]

let the dow get some direction first................

 

[NVP]

i'm gonna try and create a little video today as i pop in and out of the screens and commentate

i'll also try to cover the NFP action to show what the corrie does when fireworks go off

N

 

[NVP]

buy G/U

 

[NVP]

thats a nice start........fast and smooth progression

 

[NVP]

i got lucky there.....

 

[NVP]

but the markets are still spiky so his could be short lived and painful

 

[NVP]

close it for a couple of pips

 

[NVP]

i need the dow to move up or down and stop ranging dammit........

 

[NVP]

sorry all

duty called elsewhere............i'll try to post some videos today