Zeusjoes Market-Neutral Hedge Strategy

cool. im interested in knowing how u actually work out the difference in correlation.

http://www.forex-tsd.com/indicators-...html#post86804
best correlation indicator out there.
Enables you to plott 2 charts in one window. And you can inverse EUR/USD and USD/CHF to get them to match each other.

Thanks tjpld, havinga look at it now. looks complicated...lol

how do you calibrate them to match? when you say inverse them do you mean make one positive and another negative? or are they both positive?

Just change s1correlation from + to -.

Waiting for the indicator this coming weekend.

maybe this one could help? i found in another forum and i modifie an indic to better view

It's basicly what I've posted but you don't get bar charts like with the forex tsd indicator and you don't get the current value of the other pair.

Simple, export price data to excel and use it to create a chart with the formula GBPJPY-EURJPY. Done.

Guys, I am also very interested in correlation/arbitrage/hedging systems. Actually, I have developed an EA that trades in similar manner. I can give you a link if you are interested to see our results (6 months of forward tests on demo and live). Do not want to post here because it is a commercial EA and might be considered as spam here. Let me know.

not as simple as that. and surly it is more simple to load an indicator?

Alrite! This indicator is a good supplement to my MA system. It looks really interesting!

Thanks to Zeusjoe for "the hedge" system, going to try this one out for sure!

mvh DramaKing

I am trading in a similar manner.
But to have an optimal TP and SL we should be able to gather data off how big the out of correlation gaps on the different timeframes are ?

Yeah... I think GBPUSD is moving faster than EURUSD, because GBP is worth more than EUR... EUR is 0,78 of GBP.

But I don't know if you put ~0,78lot in GBPUSD against 1lot in EURUSD would be right tho

mvh DramaKing

GBP is moving faster not only because is worth more, there are another factors too - one of that is liquidity of pair.

I did some research some time ago about pair traiding (not fx pair but two different equitis, futures etc). Pro often use normalized divergence of pairs.
One calculate average of pair div (price), next calc average of div between this average (between avg and pairs price div) and divided it by standard deviation of it. This sound complicated but it isn't - I did it in Excel but it's easy to programm it. I attached some scans form book "The handbook of pairs trading" by Douglas S.Ehrman. Btw this is interesting book if one is interested in pair traiding.

Regards,

Andrew

Very good strategy. Today already made some pips on
EUR/USD and GBP/USD.

No complicated and still slow indicators - it's the best way to trade.
Just need some more time to test this strategy, but i already see potential.

Zeusjoes, where are you?

S.O.S zeusjoes !!!

Tgijs, what is you experiance in this metod?

Here's another way of taking advantage of non correlation on highly correlated pairs.

In this case you don't take 2 jpposite orders? so how to choose on what pair open trade and in what direction?
How can you predict which pair will chande direction to match another pair?

In other words, when you buy GPB while EUR is downtranding GBP can go down to match EUR.

Or i've missed something?