Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

Jees N,

you are offering a damn good stuff, great job sir ,

I've just watched your trailer and that´s it, the way how I´d like trade...when some currency cross your touchdown lines it´s only matter of time to came back (and I take it as only one sureness of forex, or it´s only my wrong feel ?)

btw. I´m little confused about currency correlations (I have to deeply think about it, some helpfull ideas how to solve my problem, or show me the way ?) ... can I somehow discover it from pairs correlation ?

thx K

i'll talk about correlation this week my friend......theres a lot of garbage out there unfortunately

N

 

[trend_catcher]

Hi NVP;

I was looking for 'correlation' topic and found this forum. OMG! I wish I discover this thread right from the beginning. I am trying to read all post and it's taking me some time. Just a few days ago, it was 500 pages or so and now it's over 700 pages..., 200 pages added to my reading... :-0

This maybe a stupid question, but nonetheless, I would like know.
On "Rules of Combat" Page 636 post #5082, you mentioned .... " as many as possible other G6 currencies... " Would you tell me What is G stands for ?

 

[NVP]

Hi NVP;

I was looking for 'correlation' topic and found this forum. OMG! I wish I discover this thread right from the beginning. I am trying to read all post and it's taking me some time. Just a few days ago, it was 500 pages or so and now it's over 700 pages..., 200 pages added to my reading... :-0

This maybe a stupid question, but nonetheless, I would like know.
On "Rules of Combat" Page 636 post #5082, you mentioned .... " as many as possible other G6 currencies... " Would you tell me What is G stands for ?

hey T

welcome !...........

I think the G stands for Global representing how major these guys are......there are global financial summits sometimes (called G6 or 7 or 20 etc etc) and most of the finance dudes attend from those countries

N

 

[NVP]

i'll talk about correlation this week my friend......theres a lot of garbage out there unfortunately

N

hey K and everybody :smart:


better still - ask me what you want to know re correlation and I will try to answer as best I can

N

 

[NVP]

mornin.................heres the morning situation next will be at lunchtime

if you notice our Corrie stable is shaping up just fine

we have divergence trade signals (80/20 ma's) , and then we have the new convergence trade signals which generally will not overlap much as you will soon see over the coming weeks

like an American Football team - we have an offensive line up and a defensive line up
and the offensive is in play at the moment

N

 

[NVP]

Jees N,

you are offering a damn good stuff, great job sir ,

I've just watched your trailer and that´s it, the way how I´d like trade...when some currency cross your touchdown lines it´s only matter of time to came back (and I take it as only one sureness of forex, or it´s only my wrong feel ?)

btw. I´m little confused about currency correlations (I have to deeply think about it, some helpfull ideas how to solve my problem, or show me the way ?) ... can I somehow discover it from pairs correlation ?

thx K

ask and i will see if I know the answer......theres a lot of rubbish generally talked about correlation in most forums

N

ask AND i WILL

 

[NVP]

Jees N,

you are offering a damn good stuff, great job sir ,

I've just watched your trailer and that´s it, the way how I´d like trade...when some currency cross your touchdown lines it´s only matter of time to came back (and I take it as only one sureness of forex, or it´s only my wrong feel ?)
btw. I´m little confused about currency correlations (I have to deeply think about it, some helpfull ideas how to solve my problem, or show me the way ?) ... can I somehow discover it from pairs correlation ?

thx K

nothing in life is guaranteed but we will see how extended band divergence will bring profits by playing the percentages , and choosing the right partners to do it with at the right time :smart:

N

 

[NVP]

I want to talk about trading timezones so someone remind me if i've not posted by thursday

N

 

[NVP]

heres Boris from BK forex with some wise words .....or why not save yourself even more money and trade these rogue signals on a Demo ? :smart:


The Ten Percent Solution

All Setups are Worthless If You Don't Practice Proper Risk Control

That was my message at the New York Expo this past Tuesday as Kathy and I presented to a very enthusiastic group of FX traders who had come from all corners of the world. We produced chart after chart of various trade setups that we use daily but constantly stressed the possibility of failure and the need to always limit your losses. In fact I presented my Rules to Scalp By list which essentially boiled down to:

1. Trade only during the high liquidity times of NY- London crossover

2. Always auto attach a stop to any entry you make

3. Never average down

4. Stop trading for the day after three consecutive losses

Someday I will deconstruct each one of these ideas in detail, but for now suffice it to say that these rules should be part of any trading model. A trading model of course is nothing more than an organized, logical construct of the market. It is not a set and forget it profit maker.. It is not the holy grail and no matter how well it backtests on your simulator it will never make you rich all by itself. A trading model - any trading model - is simply a business plan and like all business plans it needs flexibility in order to succeed. Nevertheless without a plan even one written on the back of napkin, few businesses can survive and prosper. Similarly without a trading model few traders ever become consistently profitable.

But let's get real for a second. Even if we have a good trading model that provides us with a reasonable edge - how many of us would follow it faithfully taking only the trades that the model suggests? It would fair to say that most traders fail at the same miserable rate as most dieters do - about 90% never stick to their plan. We are after all human and very few of us can withstand temptation - be it a red velvet muffin or the fast moving price action of the currency market.

While I can't help you with your diet there may be a way for you to have your cake and eat it too when it comes to trading the currency market. Can you trade without rhyme or reason, break every rule I've mentioned above and still adhere to your trading model? Yes. The key lies in the ten percent solution.

I bet that if you examine your trading statements and extract only the trades that meet your setup criteria, the net return would be positive. However it is the sprinkling of random seat-of-the-pants trades in your daily P&L that is typically responsible for the majority of your losses. You can castigate yourself for the hundredth time promising yet again that you will never, ever deviate from your plan. Or you can do what I do- trade at one tenth the size of your normal trades whenever you make a trade that is not part of your model. In other words if your standard setup trade is 100,000 units then the impulse trade is only 10,000 units. This way you get to experiment with new ideas, satisfy your urge to be in the market, but also maintain risk control. Even if you make five losing impulse trades in a row, one proper setup trade will bring your account back to break even.

The ten percent solution is by no means a panacea for bad trading, but it is a pragmatic strategy in dealing with our human foibles. In life there is always a wide chasm between what we "should do" and what we can realistically accomplish. The ten percent solution tries to bridge that gap by mitigating our worst instincts when we trade while giving us the freedom to experiment with new ideas.

 

[NVP]

hey all - i'm trying to cut down on my update posts but this is a setting !

heres provisionals for the 1hr chart and same band rules apply

you can see that recently we had a 4+ band spread on NZD and CHF who are NOT in the same tribal groups so it needs to be a 4 band+ to trigger a signal.....

second chart shows where I would have entered .........Trading is an Art and not just a number generated robot........so I am open to all comments and discussions on how you want to play your entries :smart:

also note that you need to seriously be resizing you bet per pip level per each trade
this one for example requires a minimum 70 pip s/loss so your 2% or 3% needs to be scaled to fit that criteria

look back on this chart and remember the band rule for tribes (3 bands min) and non tribe pairs (4 bands min).......theres a lot of nice trades that are not home runs but are steady returns

N

 

[NVP]

and conversely the 1mins are superb fun but naturally only on USD pairs due to spread issues


I will issue the exact bandings at some point but heres the scalping rules for USD 1mins

make your own bandings up as its not difficult - eyeball where the G8 rarely go and call that the hyper extention thick red banding value - same both sides of the Zero

then devide by 3 and put the other red and neutral bandings equally down to the zero line

yes its that simple ........i'm a trader not a nuclear scientist !!


Tribal partners - Yen and CAD = 3 bands minimum
Other Currencies - 4 bands minimum

and boy its fast and furious - like its 80ma / 20ma corrie brother on a 1 min TF....

N:smart:

 

[NVP]

ok gotta go.......duty calls elsewhere

meanwhile on my other FREE standard Divergence system hope you are enjoying the Tag sells on the 5 mins 80/20

enjoy
N

 

[NVP]

see how on the 5mins all the divergence plays are in action and the convergence plays are sitting on the bench due to all currencies inside the neutral zone (2 bands) ?

thats how it works my friends usually ........yuo dont have both teams (systems) out on the playing field at the same time on the same timeframe

and some of you are now thinking how to combine - say a converging 1hr signal with a diverging 5min signal on same currencies.............yep the opportunities are limitless my friends

N

 

[NVP]

jees i need to write this all down one day...........hee hee :smart:


and I need programmers hungry to help.....please apply by pm ....pleeease !!!

N

 

[NVP]

gbp is going ballistic..........nice !

 

[NVP]

youre all getting excited arnt you because the GBP is approaching a touchdown and then we can look at potential convergence plays

calm down defensive (convergence) team...........your time will come

and then I want tackling action like this from you...

NO MERCY .......ram those currencies back towards the Zero dudes

Bring it on.............

N

 

[NVP]

Convergence team warn up ........the offensive (Divergence 80/20 corrie) team has delivered mucho pips selling tag into the Euro and GBP

but now its nearly clobbering time I think

 

[NVP]

you cant automate the entries unfortunately just the alerts

the rest is pure skill and experience with some luck thrown in

every pip you can delay entering where it diverges more north is a bonus pip

sorry there nothing else to add :smart:

N

 

[NVP]

i'm not going to confuse matters with some correlation observations ...lets just play it out ......no trade as yet

and I'm sure the spread is Cr*p but thats life

N

 

[NVP]

ok position 1

if the guys wanna diverge on me futher then thank you and I will reset higher then ......just keep cranking up the pressure
:smart:
N