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Trading correlation pairs by using the other pairs

  • #441
  • Jun 1, 2020 10:11am Jun 1, 2020 10:11am
Nice and helpful thread
Neither a Bro Nor a Pro I am I
  • #442
  • Jun 1, 2020 10:31am Jun 1, 2020 10:31am
Quoting Shabs19
{quote} Any reasons why you took these trades ?

stock indices reversal possibility.
  • #443
  • Jun 1, 2020 10:39am Jun 1, 2020 10:39am
Quoting P.Action
{quote} stock indices reversal possibility.
Reason I asked is your member name is P.Action, I assume that is Price Action ?

Quoting P.Action
{quote} i trade with my own method. i open these positions according to indices. i look indices' PA and sell aud and cad. by the way gbpcad tp.
Ok.
It never gets easier, you just get better
  • #444
  • Jun 1, 2020 10:43am Jun 1, 2020 10:43am
Quoting Shabs19
{quote} Reason I asked is your member name is P.Action, I assume that is Price Action ?
i trade with my own method. i open these positions according to indices. i look indices' PA and sell aud and cad. by the way gbpcad tp.
  • #445
  • Jun 1, 2020 10:56am Jun 1, 2020 10:56am
Quoting Shabs19
{quote} Reason I asked is your member name is P.Action, I assume that is Price Action ? {quote} Ok.

and for these trade.

i follow all aud all gbp all eur all cad pairs.

i got tp level 1,6408 for euraud if take some time i close manually.
  • #446
  • Jun 1, 2020 11:04am Jun 1, 2020 11:04am
Quoting redfan
{quote} I don't mind using indicators, But when it comes to the EA's I just don't trust them, there's a thread on the trading platform called Monday Tuesday Wednesday, it's a pretty good system when it was being manually traded, But then someone made it an EA and the trouble is when the EA started it started doubling up lot sizes and before you knew it you are trading a pound lot and if it went the other way. It was nearly wiped you out like I say the system worked when it was manually trading,

We don't need to trust them to give the idea a good testing or to give us alerts of what to look at manually. I've seen three threads of this basic strategy and it appears to work well. The original thread on the strategy was Bill Bliss "pair divergence" as far as I know.

In the paperclip is:

https://www.forexfactory.com/showthr...52#post3271852

also note this post for filtering possibly "wrong" setups>>>> https://www.forexfactory.com/showthr...16#post3274316

It seems rather clumsy using overlay charts, but maybe somebody has time to test it or a programmer is interested in working on something. FWIW


Cheers

PS i'd never trust an EA or indicator that i don't have the MQL for and can't look under the hood or change as i see fit, so I'm not disagreeing with you, but for sake of testing and/ or alerts it is worthwhile I think.
  • #447
  • Jun 1, 2020 11:23am Jun 1, 2020 11:23am
Quoting P.Action
{quote} and for these trade. i follow all aud all gbp all eur all cad pairs. i got tp level 1,6408 for euraud if take some time i close manually.
I dont trade EURAUD margin too high for me, AUD pairs , AUDJPY is good value.
More than twice the margin for about the same ADR. So you could trade a bigger size potentially or half the risk.
It never gets easier, you just get better
  • #448
  • Jun 1, 2020 11:29am Jun 1, 2020 11:29am
These thread has great inputs but it seems to go far for the initial propose of CORRELATION TRADING..... it's a pity
  • #449
  • Jun 1, 2020 11:41am Jun 1, 2020 11:41am
Correlations & Strength based on NY Session
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  • #450
  • Jun 1, 2020 12:06pm Jun 1, 2020 12:06pm
Quoting MQLTrade
These thread has great inputs but it seems to go far for the initial propose of CORRELATION TRADING..... it's a pity

huh? The strategy of redfan is exactly the same as it was in those threads, with the exception of a moving average that redfan is using. correlation + divergence = trading opportunity. it is the essence of correlation trading. Without divergence of correlations you are simply trading strength or momentum and not correlation. Divergence is the key element to correlation trading.

example setup for correlation trading = .....both pairs are moving up together...one diverges, then the other pair(which you trade upon it's divergence) also moves up as expected....

I've tested the strength indicators and they are only good in strong trends. Correlation divergence is a much more reliable idea for a setup over time. IMO

I've only manually tested though.

The commercial EA somebody was testing earlier in this thread seems like a fine idea also utilizing moving average of spread ratio+ correlation.

In any case, you have a trigger that tells you something.... you also have an expectation of what price is going to do on the pair you are trading due to the other pair and the fact that the two pairs are moving together(i.e correlation).

for those not getting it I'll try to explain it to my own peanut brain lol. bottom line. correlation trading needs a trigger. that trigger if not divergence then what? it has to be divergence. think of it this way.... both pairs are moving down lets say for example. one pulls back up while the other keeps going down... what will happen next? If both pairs are correlated and moving down then the one that pulled back will continue down..... it's just a retrace and you know it.....
  • #451
  • Jun 1, 2020 12:08pm Jun 1, 2020 12:08pm
Quoting MQLTrade
Correlations & Strength based on NY Session {image}

very strong trends across all pairs there..... easy peasey
  • #452
  • Jun 1, 2020 2:44pm Jun 1, 2020 2:44pm
Quoting dagoods
{quote} We don't need to trust them to give the idea a good testing or to give us alerts of what to look at manually. I've seen three threads of this basic strategy and it appears to work well. The original thread on the strategy was Bill Bliss "pair divergence" as far as I know. In the paperclip is: https://www.forexfactory.com/showthr...52#post3271852 also note this post for filtering possibly "wrong" setups>>>> https://www.forexfactory.com/showthr...16#post3274316 It seems rather clumsy using overlay...
Okay, you've got me interested. I want to use diversions right at the very start,
but I found I was waiting all day for one to appear, Then there were days I missed them completely because I was away from the computer,
So I sort of got on the wrong track,
You've got me interested again, So what I'm going to do Is am going to make two charts one 5minutes and the other one hour
I will copy them from the thread pairs diverging method,
probably use two moving averages that are 21+ 50 exponential MA.
Currency strength meter,
It's just dawned on me I will have to check every morning to see if these two pairs
are higher or lower than -60 or +60 two pairs I'm thinking of are EURUSD USDCHF
if you go any suggestion on the pairs let me know,
  • #453
  • Jun 1, 2020 3:04pm Jun 1, 2020 3:04pm
Quoting Shabs19
{quote} I dont trade EURAUD margin too high for me, AUD pairs , AUDJPY is good value. More than twice the margin for about the same ADR. So you could trade a bigger size potentially or half the risk.

Except ADR there is no difference any currencies. if aud is left side margin requirement is same if right side you could multiply 0.7 your lot size so there is same margin requirement. aj has more volatility because of scotk indices. when indices up aud up and jpy down and vice versa. that give us volatilty.
  • #454
  • Edited 3:35pm Jun 1, 2020 3:24pm | Edited 3:35pm
HERE THE CHART

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  • #455
  • Jun 1, 2020 3:25pm Jun 1, 2020 3:25pm
Quoting P.Action
{quote} Except ADR there is no difference any currencies. if aud is left side margin requirement is same if right side you could multiply 0.7 your lot size so there is same margin requirement. aj has more volatility because of scotk indices. when indices up aud up and jpy down and vice versa. that give us volatilty.
Of course ADR is different from currency pair to currency pair and margin is calculated based on volatility.
Margin will affect your Lot size assuming you do not change your Risk exposure.

Currency pairs do not move because something else moves first, all these events occur simultaneously, unless there is a feed delay.
News events can be the big mover, but very often the market has anticipated and already priced it in.

Not sure what you mean "if aud is left side margin requirement is same if right side you could multiply 0.7 your lot size so there is same margin requirement"
It never gets easier, you just get better
  • #456
  • Jun 1, 2020 3:31pm Jun 1, 2020 3:31pm
Quoting Shabs19
{quote} Of course ADR is different from currency pair to currency pair and margin is calculated based on volatility. Margin will affect your Lot size assuming you do not change your Risk exposure. Currency pairs do not move because something else moves first, all these events occur simultaneously, unless there is a feed delay. News events can be the big mover, but very often the market has anticipated and already priced it in. Not sure what you mean "if aud is left side margin requirement is same if right side you could multiply 0.7 your lot size...
for example if you open 1 lot at audjpy. you could open 0.7 lot at euraud. they are same

0.7 comes from audusd.

for nzd you mltiply 0.63
  • #457
  • Jun 1, 2020 3:41pm Jun 1, 2020 3:41pm
Quoting redfan
{quote} Okay, you've got me interested. I want to use diversions right at the very start, but I found I was waiting all day for one to appear,
Regular Divergence 50 - 50 Doesn't always work.
Hidden divergence Better.

Just my tuppence worth.
It never gets easier, you just get better
  • #458
  • Jun 1, 2020 3:47pm Jun 1, 2020 3:47pm
maybe momentum shift this time.

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  • #459
  • Jun 1, 2020 3:52pm Jun 1, 2020 3:52pm
Quoting P.Action
{quote} for example if you open 1 lot at audjpy. you could open 0.7 lot at euraud. they are same 0.7 comes from audusd. for nzd you mltiply 0.63
Your Margin calculations are not what I am seeing with my broker, what leverage are you basing your calculations on ?
It never gets easier, you just get better
  • #460
  • Jun 1, 2020 4:02pm Jun 1, 2020 4:02pm
Quoting Shabs19
{quote} Your Margin calculations are not what I am seeing with my broker, what leverage are you basing your calculations on ?
I use different leverage according to position reliabilty. Sometimes high sometimes low.

But i Calculate as i said.
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