the hare
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Did you know Eur/Usd, Usd/Jpy, and Eur/Jpy are all connected??
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shakespeare515
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The mods also removed the post where I explained the live trade based on the Triad Correlation, it was purely informational... If you want to see the live trade video, it is at Forex Malibu, It is the Oct 3, 2011 Short Eur/Jpy trade. (It was a quick 2 minute trade.)
To say Eur/Usd and Usd/Jpy "rarely do anything together," is simply untrue. If you watch the live trade video i mention above, and you look at the 1 minute charts in the video, you will see that Eur/Usd, Usd/Jpy and Eur/Jpy are all moving in a downtrend together, This happens quite frequently. Especially recently since the Euro zone crisis has been causing extreme euro weakness and the flight to safety has been causing strength in jpy. The strength in Yen has been pulling down Usd/Jpy and Eur/Jpy, and the Euro weakness has been pulling down Eur/Usd and Eur/Jpy.
To say Eur/Usd and Usd/Jpy "rarely do anything together," is simply untrue. If you watch the live trade video i mention above, and you look at the 1 minute charts in the video, you will see that Eur/Usd, Usd/Jpy and Eur/Jpy are all moving in a downtrend together, This happens quite frequently. Especially recently since the Euro zone crisis has been causing extreme euro weakness and the flight to safety has been causing strength in jpy. The strength in Yen has been pulling down Usd/Jpy and Eur/Jpy, and the Euro weakness has been pulling down Eur/Usd and Eur/Jpy.
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shakespeare515
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brettus,
right on.. this is not the entire point, but it is one of the advantages of simply knowing the Triads. finding the right trade. It is not as obvious as you would think, many traders do not realize that Triads are simply logical groupings of currency pairs that allow for the most efficient analysis.. They are "closed loops", you are taking (in this case) Eur, Usd, and Jpy and matching them with each other. This allows you to quickly identify which is strongest and which is weakest in moments, subsequently giving you a better feel for the market..
NVP
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hey all
I tend to dabble a little with correlation in currencies......can someone explain what point is being made with this thread ?
First of all to understand correlation drop the pair chart stuff - it does'nt help and makes things distorted
if you are talking correlation of GBP to Euro its probably positive overall but depends on the market dynamics at the time and the strength of the main market push which is always based on the prevailing strength of the yen and usd
N
I tend to dabble a little with correlation in currencies......can someone explain what point is being made with this thread ?
First of all to understand correlation drop the pair chart stuff - it does'nt help and makes things distorted
if you are talking correlation of GBP to Euro its probably positive overall but depends on the market dynamics at the time and the strength of the main market push which is always based on the prevailing strength of the yen and usd
N
shakespeare515
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NVP,
You can google "triad correlation" and you will see the video this post is referring to. It is basically grouping currency groups into logical groupings that create "closed loops."
It is difficult to say Eur and Gbp correlate positively most of the time.. The only time eur and gbp correlate well is when Eur/gbp is not moving or in a tight range (eur/gbp completes the triad and closes the loop.) when eur/gbp starts to trend, then eur and gbp no longer correlate. So those that say eur and gbp move together are essentially saying eur/gbp is never trending (obviously not the case)
Also NVM, not sure what you mean by the "main market push". All you really need to look at is the third pair that completes the triad.
Also not clear on what u meant by "drop the pair chart stuff"
Sam
enragedcow
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The only thing you got wrong was the name; it's not the Triad Correlation it's the Asymmetrical stochastic behavioural boolean function describing the nash equilibria of the metaphysical economic ethyr.
To profit, pick a pair, build a super fast algorithm with ridiculously fast internet and a direct market order system that's quicker than everyone else's and wait until one of the pairs overvalues/undervalues according to the arbitrage rule, then trade that arbitrage opportunity and enjoy riskless profits.
shakespeare515
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Awesome enragedcow! While your suggestion would be impossible for the average trader... You have pointed out the exact reason why the correlation holds true.. because when there is even the slightest imbalance, the market makers with the fastest computers running trading algorithms rebalance it through arbitrage.. Those profits are not available to the retail trader, but it guarantees that the correlation will never fail.
I thought this was fairly obvious.
EUR/USD x USD/JPY = EUR/JPY
From a mathematical perspective, it is obvious that they 'all connected'.
If either of the currency pairs are 'out of whack' then the hungry arbitrage traders jump at the occasion to buy and sell to make a small profit which will re-balance the currency rates so that the above holds true.
EUR/USD x USD/JPY = EUR/JPY
From a mathematical perspective, it is obvious that they 'all connected'.
If either of the currency pairs are 'out of whack' then the hungry arbitrage traders jump at the occasion to buy and sell to make a small profit which will re-balance the currency rates so that the above holds true.
maxima
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oh I missed this pearl of wisdom. even I couldnt say it better. well done. now I see why you took this pseudonyme.
shakespeare515
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wikepedia:
A pseudonym (literally, "false name") is a name that a person (or, sometimes, a group) assumes for a particular purpose and that differs from his or her original orthonym (or "true name").[1] They include stage names, noms de plume, aliases, gamer identification, anagrams, Graecisms, Latinisations, mystifications, nicknames, and names or orders or popes.
Sorry maxima, I use my real name, always have, I have nothing to hide, never have..
unlike most everyone else on this board such as yourself who love to take shots anonymously..
Sam
scose-no-doubt
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hahahaha
PumPuiMonkey
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I've become very interested in this over the last few months. But I can't find anything on the net except for Mr. Shakespeare over here.
Yet I know someone who does very well from just looking at triads, so is there anyone out there not looking to flog something who know how to use it?
Yet I know someone who does very well from just looking at triads, so is there anyone out there not looking to flog something who know how to use it?
PumPuiMonkey
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I mean I'm sitting here looking at it, eurusd is flat, eurjpy usdjpy both down -30 pips in the last 1 hour, so what do I do?
Sell eurusd and wait for it to catch up? Sell eurusd and buy eurjpy & usdjpy, or hedge the jpy risk by selling eurjpy, buying usdjpy and sell eurusd as it still has to play catch up? Or save the spread and just sell eurusd and buy either eurjpy or usdjpy?
I can make myself dizzy for weeks with this thing...
Sell eurusd and wait for it to catch up? Sell eurusd and buy eurjpy & usdjpy, or hedge the jpy risk by selling eurjpy, buying usdjpy and sell eurusd as it still has to play catch up? Or save the spread and just sell eurusd and buy either eurjpy or usdjpy?
I can make myself dizzy for weeks with this thing...
Is this a joke? 1.3080 X 99.09 = 129.61 Works everytime. USDJPY and EURUSD aren't that correlated. What are you trying to do here? EURUSD x USDJPY = EURJPY. Selling EURUSD and buying EURJPY is as good as buying USDJPY. Selling EURJPY and buying USDJPY is as good as selling EURUSD.
Buying EURJPY = buying EURUSD & buying USDJPY
Selling EURJPY = Selling EURUSD & selling USDJPY
PumPuiMonkey
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So ? One of the best traders I know works this triad. And let me tel you another thing, bumped into a fellow who had a $500k account. Made it trading EurUsd vs UsdChf, essentially EurChf.
Thing is you have two data sets you can do calcs on. Or in the case of this triad 3, so there might very well be a significant benefit in using different data sets instead of just 1...just saying you know...
Thing is you have two data sets you can do calcs on. Or in the case of this triad 3, so there might very well be a significant benefit in using different data sets instead of just 1...just saying you know...
Well you're definitely doing it wrong. The only possible way I can see this working and for the average retail trader, it's unrealistic is to sell eurusd and buy usdjpy if you think they are correlated. Or if for example you're long AUDUSD and you want to flip that to long NZDUSD. You would sell AUDNZD, but I would only do this if your broker allowed netting.
EURUSD and USDCHF are about 80% correlated I think. EURUSD and USDJPY aren't correlated.
PumPuiMonkey
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K well, someone is doing it, like to hear from them what they do...
