Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

Hi JRP......good to see some pips in bag for am....

i'm wounded and cannot contribute....but you....you must go on and take the team forward to trading glory...........leave me here.....


Phreddy - read JRP's earlier post (below) and compare it to the last 5-6 hours lines on the 1h chart you posted.....

he did ok selling the Europair against the USD (as you were commenting).....

http://www.trade2win.com/boards/for...g-basic-ideas-strategies-103.html#post1006722

N

 

[NVP]

really looking forward to phoning the IT support tonight when I get home

NOT :whistling

Another note for my list when i am a rich and successful trader.....make sure your systems do not crash at important (or any) times !!

N

 

[NVP]

hmmm.....2 hour phone call later it seems to be working....fingers crossed


the "PURE" price action trading approach on the 1000/1 corrie is brutal and simple

we look to trade where a major breach occurs of previous support/resistance levels
preferably where the 2 currencies we are lining up to trade breach in the opposite direction at the same time (perfect trade)

also perhaps 2 TF's confirming the move also helps (say the 1m and 5m for scalping)

you can see i also throw in the index corrie and basically the kitchen sink to try to support the move but above is it in its purest price action terms

heres the 5m 1000/1 corrie for today.....

first vertical line was trade 1..(7.50am ish)....the USD finally broke its recent high as the Euro was steadily breaking its low of the day...the GBP was actually going up strongly so was not a trade ?...sure it fell back a little - but look how it was then cutting you to threads by following the usd's pattern up...ouch !

the second vertical (10.30am) is not a 100% pure trade but if i was bullsh*iting you I would try to sell this as a pukka trade somehow....as the GBP falls nicely against the others !

Sure the GBP was falling nicely and a decent breach of recent highs was made - but was the USD really looking to be continuing up with the yen looking to be falling as well ?
ironically the Euro was looking to be weak in support of the GBP fall and boy would you have got hurt going E/U instead of G/U .........crazy !

trade 3 ?...third vert line (2pm)...what do you think ?,the yen is falling nicely and the USD is slowly falling so not a bad area to consider a sell here....but into what ?

the GBP had 1 small higher high but was not near a sigificant breach upwards and the Euro was flat but nearer to a decent breach....trade or no trade ?...or wait till both currencies have breached ?

Trade 4 (16.10pm) was a classic reversal of previous action....usd was into its second higher high as it then hit the resistance level and breached it and yen was showing fast progress upwards to support this.....Euro wwas fallign fast and had breached its recent lows already so was a hot sell candidate....GBP was just turning down...so was it worth a trade ?..........G/U was rockier but gave more pips.....Euro leveled out slowly but a few there I hope....

so do you see the possibilites ?....it takes practice and some days the trade will scream out more than today ....you just have to be patient !

so that is the way to trade 100% pure corrie....comments please !!

N:smart:

 

[NVP]

morning all

this post being written to coincide with the 7.15 bar completion....

flattish overnight - at this time the Tag are making shapes to possibly fall (dependent on breaching the days lows to date....

Euros has a good night in continuation of yesterdays push upwards....GBP still pushing slowly upwards on
the 30m but momentum fading......

markets at best a possible upwards opening bias supporting the tag fall above

game on......and those red horizontals are the 15m bar range

look for a GBP and Euro breach upwards then
N

 

[NVP]

just do the opposite to what I say then.........

 

[NVP]

7.15 results

hmm not bad.............would like some more clarity around correlation but again this was a pips up day

N

 

[NVP]

busy bee today..........will post when I can

loads of notes now building up re the correlation dynamics of our fantastic 4 currencies
we are focussing on at present....so will get them together and publish when I can......

1 obvious and simple one is that when tag team are running together and they are joined by 1 of the europair.....the other Europair individual MUST trade against the USD during that period...

obvious but brutally true this morning as Tag and GBP teamed up to bury the Euro for a while following the 7.15 am bar range

Other things I am constantly looking for to test :-

when Tag team are not correlating
which is showing as the more volatile currency....GBP or Yen ?
triple currency plays (as already discussed above)

and loads more all in the pot (even before you bring in the market correlations !)

weve only just scraped the surface of 4 currencies !
N

 

[NVP]

GBP's doing its own things again vs the other 3 ....nice!

sorry to confuse matters in the elevators but :-

(all 14/3 settings)

first elevator is the indexmarkets corrie 5m

then ive loaded the 14/3 corrie 9like a 20ma) for the 4 currencies we look at on a 1m, 5m and 30m TF's
so in other words this is a much faster ma than the 1000/1's we look at on the right of the chart

why ?.....because it is much more exagerated re showing which currency is dominating at that moment in time.....so you see here that the red line (GBP) is in total domination at the moment due to its recent rise...and look how the bule Euro is tending to stay with the tag team......this is a tripleplay with GBP being the buy !

N

 

[NVP]

buy GBP ?

 

[NVP]

also buy Euro sell GBP is looking interesting....the logis is that if the Tag do respond back upwards then GBP will collapse faster than the Euro i suspect.....

 

[NVP]

nope the GBP is the guvnor....and killong all the other 3 again now

 

[NVP]

yum yum yum.....watch out though as usd hitting resistance levels on the 30m corrie

 

[NVP]

xmas has come early for JRP !!!

I rarely see the 30m chart with a currency that vertical !!

look at the way on the large middle 5m chart that GBP held that S/R line
and then went north again.........its great when the markets behave !

also taking about the % that each currency contributes to the pair traded....GBP
put on 30 pips vs Euro on that recent bounce which was pretty much 100% of the haul
in that pairing.....then in the G/U 50 pips climb - you can guestimate that at least 2/3 of the haul
was due to the GBP and 1/3 to the USD fall....

so well done the GBP !

N

 

[jrplimited]

Hi N and all his elf helpers - you are there somewhere arent you?

Bit late on parade today so straight into the bun fight observations....

G/U At last it moves! Couldnt get a sell stop fill after 08:45 bar drop (thank you who ever!) so cancelled this and opened a buy stop at 62758 after that 09:15 bar poked its head teasingly above previous high range and this got filled during that whoosh 09:35 bar, settled down a bit with MAE of less than 5 pips then blast off! Exited first trade on TS hit during 10:40 bar for a very nice and welcome 52 pips profit. Second trade entered long on 11:35 bar at 63492, price slowed right down but never really threatened SL, then sprang up and, as of posting, I've got a tight TS to lock in at least 11 pips profit - now hit and taken out.

E/U Another long only bias today. For first trade a buy stop was set at 45432 after that big 08:25 up thrust bar and got filled during 09:00 bar. Price came down to a couple of pips or so below my entry point before climbing upwards again, then drifting down a little with no real conviction until at last it engaged gear and shot northbound. I've got a TS which has just come under threat that will lock in 25 pips profit - bang! Just got hit so I'm out.

E/G First trade long at 89513 with buy stop during 09:05 bar then price promptly turned on me and took out my initial SL for a 18 pip loss - SL was rather large today as quite a lot of volatility earlier on. Second trade was a sell stop at 89257 to catch any momentum from that 09:35 down bar and was filled during 10:05 bar. Went immediately into MAE of several pips before momentum did indeed kick in and price drove downwards. Taken out with tight TS (tight as mistake over cursed five digit numbers on my part!) during 10:50 bar for 14 pips profit and couldnt find any decent sized bars afterwards for possible short re-entry.

Good day for a refreshing change and havent had one of these for nearly a week now - just goes to show that it does come if we are prepared to wait.

N; saw one of your earlier posts today (about two pages back?) where you correctly called this morning's overall directions for E and G plus also if you analise the significant movements for this morning using the "who is the leader" approach we posted about a few days ago, G was the strong buy candidate as it rose against U and E, whilst E was the middle man (rise against U, fall against G) and, of course, U the whipping boy (fell against G and E).

Trade well and regards,
Simon.

 

[NVP]

1pm market roundup

Hi all

suspect JRP about to post ................will his pip basket be full of G/U
xmas cheer ? :cheesy:

heres roundup......GBP finally run out of puff in anticipation of US opening......by the way has any thing come out on their interest rate debates yet ?

I know this is really stupid and I'm supposed to be quoting Phd correlation theories all the time to look good BUT

does anyone out there just have the 3 pairs up re G/U/E and do something simple like trade any currency when its on the same ma side of the line against the others ?

(ie whatever is the strongest or weakest currency of the 3 by virtue of the ma(s) being used ?)

this morning that would have netted a lot of the GBP pips on say a 20ma

although this does exclude using any Yen correlation activity with the trio !

N

 

[NVP]

Hi N and all his elf helpers - you are there somewhere arent you?

Good day for a refreshing change and havent had one of these for nearly a week now - just goes to show that it does come if we are prepared to wait.

N; saw one of your earlier posts today (about two pages back?) where you correctly called this morning's overall directions for E and G plus also if you analise the significant movements for this morning using the "who is the leader" approach we posted about a few days ago, G was the strong buy candidate as it rose against U and E, whilst E was the middle man (rise against U, fall against G) and, of course, U the whipping boy (fell against G and E).

Trade well and regards,
Simon.

thanks for the comments JRP......let me sit in a darkened room for the latter comment here.....I do know what you mean though......

elves have gone to the carribean for the winter now so just us two again.....phreddy may have sold his services and alliegence to other threads.....the hussy !

may need to have a major press gang excercise in 2010 for our Crew !

good work on the pip haul......
N

 

[jrplimited]

Hi N - seems like only you out there for now!

Fascinating to see we were both looking and thinking about the same thing regarding that "who is the leader" approach. I certainly had this firmly in my mind when contemplating a second entry on E/U - ie tread with extreme caution and only look for clear setups.

Simon.

 

[NVP]

ah Glasshoppah....

the road we walk is empty and quiet....but all the more rewards to share between us at the end ! :|

N

 

[phreddyinbg]

No, no, I'm still here but trying to get some of the posts sorted in my mind.

Looking elsewhere for a little light relief. All work...etc

 

[NVP]

gotta go soon.............

heres a wrap up ............quieter afternoon but still not bad at all !

look at the USD hit that resistance (previously support) level this afternoon around 2pm on the far right 30m Corrie....since then has been nice sells of USD !

JRP will be a happy bunny tonight

N