Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

Hi N and anyone else out there,

Its nfp day today so I'm using half my usual "pop per pip" and also trying to be careful.... Careful? Thats a first then!

GU; First trade entered long at open of 09:40 bar for 17 pip fairly edgy profit.

EU; Sell filled during 08:05 bar for 8 pip profit. Second trade entered long on 09:10 bar for 16 pip loss. Third trade entered short on 09:25 bar for 5 pip profit.

EG; Yet another basket case chart wise for me today and although I could "see" a good short and long scalping opportunity, decided to leave this pair well alone as the normal good syncs between G and E moves has been rather lacking lately.

So its now a case of watch out for the 13:30 nfp build up and subsequent bomb if anyone is brave enough. Not for me though as if I do trade, I always wait for a least a good thirty minutes or so, and even then trying to find only solid setups.

Trade well and regards,
Simon.

double digit pips is better than nothing JRP

heres the action on the 1mins where JRP entered trades......shame about the 2nd trade on Euro as it walked into a wall and reversed (as did USD at the same time)

Ive highlighted when the overnights got breached (Green vert)....but hindsight is a 100% accurate methodology and a little riding of the retrace was required to score pips there on selling G and E into U

N

 

[NVP]

Then what kind of "plays" are being done here?

Hi TRO

as pm'd to you.....let me list some things we look for here later on......always good to reiterate these to the viewers anyway

regards
N

 

[NVP]

fireworks have started then ?

tag just breached overnights down....

seatbelts on.....

N

 

[NVP]

sorry got to go home............will try to post a little at weekend

thank you to everyone who posted this week

N

 

[NVP]

a game of 2 halves......?

I love the ole soccer cliches......give me a 20 something footballer earning 200 squillion pounds a week with his face in the microphone*** and i'll show you a disaster waiting to happen.......

anyway it was a game of 2 halves this week folks......buy markets/sell tag front end ...then reverse the principles the back end with the europair happy to oblige as the Tag pairs.......shimples !

left chart is markets right chart is normal corrie

in fact you can see that buying the JPY/USD is just as effective - especially in the second half.....

but lets keep things straightforward here as the JPY/USD trading relationship is a different kettle of fish.....

N

*** I said microphone.....what are you lot like ?

 

[NVP]

what do we do here .....?

Hi all

TRO pm'd me a simple question re this thread and I should have a simple and concise answer for him....

what is this thread about ?......and what systems do you trade ?

but I must confess i dont so will do my best now.....:whistling

Qu - what is this thread about ?
Ans - using market correlation to assist in making trading decisions

Qu - expand please
Ans - looking at a pairs chart for me just does not cut it and is not enough......my nature is always to dig deeper and to peel back knowledge layers.....knowledge is power and learning if something doesnt work is just as important as learning if it does

Qu - expand please
Ans - is there an echo in here ?......seriously people have been observing market relationships (commodities/forex/Bonds/equities) for many many years hoping they can find the holy grail from watching their correlated movements and trading the predicted outcomes...

Qu - and have you found it ?
Ans - nope because :-

a) i'm not smart enough
b) it doesnt exist....

Qu - so what have you learned ?
Ans - My first job was getting the forex G8's into a format i could see them as individual entities....any pair chart is just one of the windows through which you can view those 2 currencies and 1 pair chart is not enough to tell you how strong or weak those currencies are in the total G8 world....you need 7 charts to view the USD for example as it could be stronger that the Euro but weaker than the GBP etc etc .......messy !

A big break was tweaking the many forex strengthmeters out in programming land till I had something that could show me this in a format I understood !......enter the FXCorrelator !

the FXcorrelator brings currencies to life and can be used in many ways that I preach here....

Qu - so thats what youv'e learned ?
Ans - I havnt finished yet......sure my thread is a lot of FXcorrelator (corrie) action and I encourage people to use it like any standard chart ....support and resistance levels, HH/HL and LL/LH action.......Range trading ......basically use price action tradign strategies on the 1000/1 corrie to support your other trading systems

Qu - not much different to watching a pairs chart then ?
Ans - its a million times different :smart: as on the corrie you can observe each currency as an individual character.....a pairs chart is one dimensional but the corrie is multi dimensional .......I advise people to match a rising currency with a falling currency (based on price action analysis).......this way it MAXIMISES the potential to have a winning trade using the pairchart to enter ........we are saying that the currencies will follow through both sides and make you money......if one falters and reverses you will still be breaking even remember as they then move in parallel.....that reduces losses !

Qu - OK I do like the 1000/1 corrie its a novel way of showing a strength-meter....so thats the thread then ?
Ans - No !.........the threrad is about correlation.....the corrie is just getting the Forex in a format i can use to gauge it against other markets that influence forex .....

Qu - like Equities ?
Ans - Yep ! I encourage people to observe key markets and to respect how much they corrlelate to the Forex market particularly to the Yen and the USD

Qu - ok so Markets go up and Usd/Yen go down ....so what ?.....big deal !.....youve missed the boat buddy as it always happens simultaneously so no edge , no cigar do not pass go do not collect £200 !
Ans - are you sure about that ?

Qu - Yes......
Ans - quite quite sure ?.......risk all your savings on it ?

Qu...no, i wouldnt !
Ans - good.....because if you look hard enough theres plenty to learn from watching these relationships....especially the strength of market moves verses the reaction of the Yen and USD (tag team)
as well as their reactions to one another...and the tag reaction to the other G6......

Sure markets up Tag down....but dig a little deeper and you can learn lots from watching markets as I do every day posting on this thread......you have to be patient and train yourself to do it .....theres no magic trading button on this thread......just observations.....and encouraging people to understand the markets more

Qu - but understanding the markets doesnt make people more money...
ans - Are you in the right interview ?........ask yourself the 1 thing that destroys most traders in this
business and sends them elsewhere in persuit of easy money ?

Qu - the wrong system ?
Ans - c'mon any Idiot will realise quite quickly that theres robust systems out there capable of generating money in the right conditions

Qu - money management ?
ans - nope sorry...lets assume the trader has been to trading 101 course and knows that MM is needed to protect the capital when the trades are not working on their wonderful system

Qu - I have no idea then....
Ans- I believe the reason most wannabee traders leave this business with tail between
their legs is......

 

[NVP]

PART 2 of the NVP interview ..........

we return to our story viewers........


The reason most traders leave this business is they cannot accept or understand why their system doesnt work sometimes (or intermitently etc etc)

and if your wannabee trader is only looking at one chart with their magic indicators then guess what.....they have no additional frames of reference to help them understand what else is going on that is also influencing the pairs movements.......and what could cause the pair to not react as they want it to....

Qu - so you are saying that what this thread does is helps explain why trades dont go right all the time and therefore encourage traders to persevere with more education
and also perhaps reevaluate what returns are possible in this business....

Ans - Now youre getting it !..........I am now becoming much more comfortable with the behaviour of pairs because I see them on the FXcorreleator as individuals (not just 1 dimensional pair charts) and I can compare them to the other markets.....

The more experience and knowledge you get from observing markets the more you realise that sometimes it works fine and other times the wheels fall off and it becomes very unstable and untradable..........unlike the unlimited wealth many are promised when they buy the latest system tool !

Qu - so whats your advice to newbies ?
ans - expand your knowledge as much as possible and absorb absorb absorb......

Qu - so youre a hot shot trader ?
ans - nope !

Qu - waddya mean no !!!
Ans - I use to dabble a few years ago and was involved in gambing in my youth
(family were bookmakers) but had to lay off everything for many years due to family committments........

Qu - so you want to be a hot shot trader !
ans - Yes ......but at my own pace and with everything is place to ensure my transition period (say first 2 years) is as smooth and (hopefully) profitable as possible....

Qu - and will you use correlation as your edge......?
Ans - No... I will use magic crystals I have discovered under a fairy kingdom in the secret forest of numnum by the lake of the mingmong tribe....what do you bloody think !

Qu - I have no more questions and I am late for tea
Ans - can I ask you a question then ?

Qu - depends what it is....and actually I ask the questions !
Ans - oh go on....please !

Qu - ok what is it ?
Ans - have you ever worn a Karen brady dress ?

Qu......sorry got to go...........later NVP
Ans..but i have one here in the Closet.....its your size as well...JRP wont wear it !

(door slam......sound of running)

ok thats it folks.........no more interviews at the moment ....time for tea !

see you tomorrow .......hope the light relief was not to tedious and a few thoughts in there amongs the pathetic weekend attempt at humour

N

 

[jrplimited]

Re: PART 2 of the NVP interview ..........

Hi N,

Great story and very cleverly presented in that Q & A interview format. The very pertinent point that stuck out in my mind after reading this two part speil a couple of times was the fact that your corrie indy doesnt actually represent a "system" for trading, its rather on the user to make use of your corrie indy and create their own system for for trading - whether its an ehancement to an existing system or instead a brand new approach.

When I first stumbled across your thread in late Autumn '09 and got your corrie indy working in its very raw format, the first thing I noticed was something you pointed out in your story, and that was seeing my favourite three as non quoted pairs displayed against each other in real time showed me a simplistic yet very powerful tool to determine which Country's currency was strong and which was weak - so if G was strong and E was strong then sell U, and out of G versus E if G was strong, focus on buying G against U and E and selling U against G and E.... The combinations just for these three currencies are always endless during intra day sessions!

From a personal view point, I think you have come a real long way since you first started this thread and most certainly those early [UK local time] overall observations you post often stay "good" throughout the day's session - a sort of real time "good for the day" position trading technique.

Its a bit of a downer that not many (like none!) people join in on your thread and post their own observations and twists on your corrie indy use - lots are looking in on your thread as I often see the "views" count move by over 200 on a daily basis.

Anyway, hope you enjoyed the weekend and are ready for this week's volatile session as we are going to start to see the true extent of the market's reaction to Spain. Portugual, Greece and Ireland fiscal problems (Euro) and also UK's massive debt problem (GBP) plus the very worrying USA weak bank capital provisions (USD) play themselves out.

Simon.

 

[NVP]

Re: PART 2 of the NVP interview ..........

Hi N,

Great story and very cleverly presented in that Q & A interview format. The very pertinent point that stuck out in my mind after reading this two part speil a couple of times was the fact that your corrie indy doesnt actually represent a "system" for trading, its rather on the user to make use of your corrie indy and create their own system for for trading - whether its an ehancement to an existing system or instead a brand new approach.

When I first stumbled across your thread in late Autumn '09 and got your corrie indy working in its very raw format, the first thing I noticed was something you pointed out in your story, and that was seeing my favourite three as non quoted pairs displayed against each other in real time showed me a simplistic yet very powerful tool to determine which Country's currency was strong and which was weak - so if G was strong and E was strong then sell U, and out of G versus E if G was strong, focus on buying G against U and E and selling U against G and E.... The combinations just for these three currencies are always endless during intra day sessions!

From a personal view point, I think you have come a real long way since you first started this thread and most certainly those early [UK local time] overall observations you post often stay "good" throughout the day's session - a sort of real time "good for the day" position trading technique.

Its a bit of a downer that not many (like none!) people join in on your thread and post their own observations and twists on your corrie indy use - lots are looking in on your thread as I often see the "views" count move by over 200 on a daily basis.

Anyway, hope you enjoyed the weekend and are ready for this week's volatile session as we are going to start to see the true extent of the market's reaction to Spain. Portugual, Greece and Ireland fiscal problems (Euro) and also UK's massive debt problem (GBP) plus the very worrying USA weak bank capital provisions (USD) play themselves out.

Simon.

thanks mate......cheque in the post

N

 

[NVP]

mornin all...............

flattish night..........no real bias forming yet but thats good as it means the 7am 15m action may coincide with the overnight breaches when they come....and they will come

if I was pushed in any comment you can see Nikkei a little sub 20ma line on 15m chart but yen is still falling and resisting the boost.......a litle feeble though at this point to start making any rash sell yen calls

N

 

[NVP]

only comment i'll make is that Euro is pretty strong verses the others.....looks promising if markets kick back upwards sending tag down.......and letting Euro really kick upwards...........its got plenty of headroom as well being at bottom of the overnight range so no breach issues

GBP is looking weak following tradtional corelation principles....so buying E/G since 5.45am ish has been a nice trade......

N

 

[NVP]

yep........Euro is doing real well isn it ......
N

 

[NVP]

who gave Euro the double expresso ?

 

[NVP]

hope you all enjoyed the pipfest on euro so far..........

Its still strong and pretty impervious to anything tag does up or down....lets see if it can break that Resistance line on the 30m far right chart.....if it breaks it without much help from the tag or the markets then boy is it looking strong today

N

 

[NVP]

E/U testing 1.3700 level............as good a test point as any !

 

[NVP]

here she goes............ ?

 

[NVP]

golds starting to rise as well......getting better.....

 

[NVP]

ws30 above 10,000 again......

 

[NVP]

did someone say that euro's over extending ?....you could be right of course !

lets see if that 1.3712 gets breached.....

 

[NVP]

euros lost the momentum......that 30m reisistence is just about holding

now we need to see what happens next and if it will fold...


N