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Zeusjoes Market-Neutral Hedge Strategy

  • #681
  • Oct 6, 2008 3:49am Oct 6, 2008 3:49am
Quoting magictrader
Hi,

everything looks ok, but still volatility is unpredictible so it's hard to adjust TP and SL. Now I can trade only on thursdays, so I'll forward test it on real account only in this days and I'll post my statements.
For now I'll use TP and SL = 15 pips.
with your technique, suppose i enter the position after the deviation goes above level 3 (using swingman - neutralprice indi), does the risk is managable? i mean even the volatility is high....

i am thinking to hedge it with usd/chf...so when the level goes to +3/-3 then i will waiting for eur to give a reverse candle stick signal (on 5 min chart) and rather than put SL,i put usd/chf as a hedge..

Anyway, i have trying to put different style of trading this indi..but i think your technique is still the best one...thumbs up..
  • #682
  • Edited 5:27am Oct 7, 2008 5:10am | Edited 5:27am
Here it is my latest trade (three days free so I can trade all day long).

When NPO hits -2 then on EU appears morning star formation, but UC doesn't confirm it (decorrelation). So wait for good signal even if NPO is above -2.
Then on EU and UC appears two opposite formations - morning star and evening star (correlation is ok). So I take entry on next candle.

Using fractal construction of the market it should also works on M5 candles (for those who like fast trades). Every setting just devide by three (M15 to M5 is 3:1 proportion). I don't know why starting parameter of 200 period on M5 works well on H1 candles and it looks that it works also if we use fractals.
Attached Image (click to enlarge)
Click to Enlarge Name: trade.JPG Size: 197 KB
  • #683
  • Oct 7, 2008 5:22am Oct 7, 2008 5:22am
Thank you Magic, the image is very helpfull


Quoting magictrader
Here it is my latest trade (three days free so I can trade all day long).

When NPO hits -2 then on EU appears morning star formation, but UC doesn't confirm it (decorrelation). So wait for good signal even if NPO is above -2.
Then on EU and UC appears two opposite formations - morning star and evening star (correlation is ok). So I take entry on next candle.
  • #684
  • Oct 7, 2008 3:37pm Oct 7, 2008 3:37pm
No problem .

I'm still trying how to adjust TP and SL, and my though is to do like this:
simply let the market tells us where to put TP and SL. Just put SL 1 pip above/below last higher high/lower low (we're using candle revarsal formations so price shouldn't go higher or lower), then measure the distance from entry point to the SL and put TP in the same distance from entry. This looks very fair to the market and maybe it will work ok.

Each trade will have different risk level, but risk to reward always will be near 1.

Tomorrow I will do some trades with this principal.
  • #685
  • Oct 8, 2008 5:37am Oct 8, 2008 5:37am
Here it is the trade with 50/50 chance. For NOP I use 83 period on M1 candles (spread was over +2) and TF M5 for formations (day trading system). This are still the same proportions from original 200 NOP M5 period on H1 candles.
Attached Image (click to enlarge)
Click to Enlarge Name: trade.JPG Size: 151 KB
  • #686
  • Oct 13, 2008 9:55pm Oct 13, 2008 9:55pm
I had tried various setting with NPO but it still make my MT4 hanged.
Is there any alternative?
  • #687
  • Oct 14, 2008 1:18pm Oct 14, 2008 1:18pm
Download new MT4 and clear everything except this indicator and chart.
I've got 200 period on M5 and it works ok, but I need to wait few seconds for loading.

I've got some new idea about SL. In first H1 strategy TP and SL was about 30-40 pips. I saw that in some bad trades (SL hit) price spike up hitting SL and then go back in our direction. So my idea is to have time SL. Just pull the trigger when signal appears, set alarm on SL place and if alarm rings that should mean that SL could be hit. But there wasn't SL. So simply wait for this H1 candle to close. If it hit TP in this hour then ok, if not then close the trade at closing of H1 candle. Thanks to that we shouldn't loose 30-40 pips but less, because price will bounce back. (History shows that).

So this is only crazy idea how to minimize average loss.
  • #688
  • Oct 15, 2008 12:03pm Oct 15, 2008 12:03pm
hello magic

Do you think that its also possible to trade with your approuch daily timeframe.And can you help to adapt like you did for 15 min tf for daily. the settings for the swingman indicator.

thanks

very intresting thread i like

thanks

LODOL
  • #689
  • Oct 15, 2008 12:54pm Oct 15, 2008 12:54pm
Hi,

i think it is possible, I never try it because there should be also bigger SL and it's not for my account (to big risk). But you can try it and share with the results . Also this is counter trend system, so when the market is trending then on daily chart, signal could appear after few days (or week), this is also not for me . For H1 which works ok it is 200 period M5 (16,66 hours). For D1 could be 100 period of H4 candles (400 hours). Proportion is 24:1. Maybe it will work.

Now I'm thinking to use M30 charts for faster entry, when I look at history trades then there were better entry points using M30.
  • #690
  • Oct 16, 2008 3:52am Oct 16, 2008 3:52am
hi thanks magic for support

i will try

regards
lodol
  • #691
  • Oct 20, 2008 2:27am Oct 20, 2008 2:27am
Hi everyone. I have a couple questions about the NeutralPrice Oscillator.

1. What does the input, "Period_Differences" mean?
2. What is the recommended setting for Period_Differences? The default seems to be 34.

Thank you.
  • #692
  • Edited 8:23am Oct 22, 2008 7:25am | Edited 8:23am
Quoting SwingMan
Thanks Andrew for your note !

I have programmed the normalized divergence (with Bollinger Band 20, 2), and the RSI for this oscillator.
You can try this tools. I think that the trading informations are very good.
For oscillator values above 2-3 StdDev, crossing the BB, and RSI under 30 or 50, the long signals are very clear (maybe clearer as from the nacked price differences).
.
dear Swingman,

Hows going?

Do u program this Neutralprice for positive correlation pairs?(your post in number 417)

If im not mistaken, to calculate this u have to subtract one pair to another and find the mean of those. But for negative correlation, i think u should do the other way because they move in opposite direction. Instead of subtract it, u have to add it...what do u think?

thanks
  • #693
  • Oct 22, 2008 12:26pm Oct 22, 2008 12:26pm
For positive correlation pairs simply use Bollinger Bands on cross pair like EUR/GBP. This is the same as Neutral Price Oscillator for EURUSD and GBPUSD.

But for negative correlated pairs like EURUSD and USDCHF, Bollinger Bands for EURCHF are not the same as NPO for EURUSD and USDCHF.
  • #694
  • Oct 22, 2008 1:13pm Oct 22, 2008 1:13pm
Quoting magictrader
For positive correlation pairs simply use Bollinger Bands on cross pair like EUR/GBP. This is the same as Neutral Price Oscillator for EURUSD and GBPUSD.

But for negative correlated pairs like EURUSD and USDCHF, Bollinger Bands for EURCHF are not the same as NPO for EURUSD and USDCHF.
so it means we can not use NPO for EURUSD and USDCHF? at least they way we do it right now using level as the sign to enter the market...
  • #695
  • Oct 22, 2008 3:04pm Oct 22, 2008 3:04pm
I use it for EURUSD USDCHF and it works ok, but for positive correlated pairs like EURUSD and GBPUSD it works the same as Bollinger Bands on cross pair.
  • #696
  • Oct 22, 2008 3:18pm Oct 22, 2008 3:18pm
Hi Magictrader,

May I ask how you use the Bollinger Bands?

Thanks,

Lenoxer
  • #697
  • Oct 22, 2008 5:18pm Oct 22, 2008 5:18pm
Hi,
I don't use BB's. Andrie mention something about NPO for positive correlated pairs and this is the same as BB's on cross pair. That was just a thought .
  • #698
  • Oct 22, 2008 6:22pm Oct 22, 2008 6:22pm
Quoting magictrader
I use it for EURUSD USDCHF and it works ok, but for positive correlated pairs like EURUSD and GBPUSD it works the same as Bollinger Bands on cross pair.
ehm...if im not mistaken u use it as a sign for reversal combine it with candle stick patern..But in this case which pair do u use? EURUSD or USDCHF? last night EURUSD shows reversal patern but instead of going up, it keeps going down...
  • #699
  • Oct 23, 2008 3:16am Oct 23, 2008 3:16am
For trade I use EURUSD only to minimize risk. But revarsal formations should appear on EU and UC, not only on EU.

It's not 100% strategy, but 80-90% and also wait for normal volatility (over 300 pips per day on EU it's sick), now markets are unpredictable and don't care about anything.
  • #700
  • Nov 23, 2008 12:33pm Nov 23, 2008 12:33pm
hi magic trader

you still trade with this method?

any news update?

regards lodol
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