Hedge trading spieler system derived from futures spread trading

Quoting lietuve

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Big Red, I am not sure I undrestand what you asking about. But once there is no answer until now, I will explain what might be your question. Say we go long on both pairs eurusd and usdchf. So while buying eur and selling usd in the 1st pair we buy usd and sell chf with the second pair - thus eliminating dollar from the equation eur/chf altogether. Then look at the value of eur/usd if we want to eliminate the dollar we should make that a monetary value of the dollar would be equal in both trades. 'Cause 1 eur is worth appr 1.47 dollars, the second trade will be not 1:1 but 1:47 appr.
Was it this you were asking about? It was explained a long time ago in the thread.

Cheers,

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Quoting spieler

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I forget to mention that when scaling out first lot with +40 remaining should be out at BE
so i am close to cut remaining position

.#

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Quoting FXSnipe

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Went short on friday at 162.40, closed the trade this morning before london open and closed the trae fro 40 points profit

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Quoting Pippopotamus

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A linear regression line. Standard deviations away from this line are drawn to produce upper and lower bands, a channel. Ps. bennyFX, have you read thread?

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Quoting MMDealer

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Who else is long?

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Quoting Big1red9

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Lietuve,

First, thanks for replying!

I understand that for every 1 lot of EURUSD, there is (at this moment) 1.47 lots of USDCHF required for the hedge.

I am having trouble understanding what role EURCHF plays. I am not clear on how the divergence is measured and or from what it is measured.

Regards,
BR

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Quoting lietuve

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Big1Red, if you understand the principle of eliminating the dollar from the two pairs that we are traiding, then you should see what's left: it's eurchf! We trade it without even touching it. That's why we measure everyday's move from the prevday's close or today's opening in eurchf in % increments. Eur and chf is a very correlated pair, 'cause they countertrend usd. Either eur or chf will go up or down when usd moves. Why it is so - too many reasons, and personally might not know all of them. All that I know, that finally they (eur and chf) some point in time will come back to some median price where they are perfectly balanced agains usd. We trade the divergence from that price. There is no way measure it ('cause it is not constant ), so what we do - we take everyday's open as the moment's balanced neutral price, calculate divergence from that price in increments of .25% up or down, and sell or buy if the price moves too much up or too much down. But all of it you know.
Also, that's the way I understand it. If I am wrong, I would appreciate if mr. Spieler or somebody else corrected me.
But I am afraid I still don't understand your question.
I wish you the best.

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Quoting redart007

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I think he is unsure 'how the divergence' and thus entry points are calcualted?

BR - you take the close of the previous day. say for example its 1.6186 Then you multiply by say 99.75% to find out where the -0.25 (1.1614) level is and 100.25% for the +0.25 (1.6226) level and so on at .50, .75, 1.0 or whatever your entrys.

(there a different rules for friday and sundays bars spieler has set out)

Then when the price reaches those levels that gives you the signal to enter UC,EU.

hope that helps?

Red

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Quoting Big1red9

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Red,

Thank you....

I am starting to understand. The term divergence was throwing me as I was looking for the instruments that are being measured against one another.

As I understand your clarification, we are looking at the difference (not divergence) of the previous days close on the EURCHF. That when the difference is -0.25 or +0.25 we take our positions.

That would imply that the EURCHF leads the EURUSD/USDCHF and at the + or - 0.25 levels the EURUSD/USDCHF positions are diverging.

At... least I hope I got it!!

Again thanks
BR

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Quoting MMDealer

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Who else is long?

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Quoting spieler

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We went through 162 very fastly so i did not cul half.

I just cut now when eur/chf hit 161.75 because slowing.
very nice one ( shorted friday when eur/cfh was 162.40)

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