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Dow Correlation

  • #1
  • First Post: Edited Dec 4, 2008 4:38pm Nov 28, 2008 6:34pm | Edited Dec 4, 2008 4:38pm
I have been trading this method for a short time with good results. It is based on the correlation between stock prices and currency prices. I hope that over the life of this thread, you will help me improve this method so we can all make lot's of money.

The method for a long trade - If at anytime between 12:30 and 1:00 PST, 1/2 hour before the NY stock market will close, if the DOW is up at least 1% and Exxon is up any amount, we will trade as follows:
Buy 3 lots on EUR/USD and buy 3 lots on EUR/JPY. Use a 40 pip stop loss for all 6 lots. Close 2 lots at plus 30 and move stop loss on last lot to entry point(will break even on last lot if get stopped out at entry point). Close 1/2 of last lot at plus 100 and put on a 100 trailing stop on the last 1/2 lot. Exit the last 1/2 lot if you get an entry to go the other way. Friday trading - if hit the 2 lot profit, keep the last lot open using the rules above. Close all 3 lots before the forex market closes if you did not hit the 2 lot profit.

The method for a short trade - I think you can figure it out.
  • #2
  • Nov 29, 2008 10:28am Nov 29, 2008 10:28am
I just did a manual backtest, on this, for Sep. and Oct.

I used a simple 40 SL and 30 TP.

EUR/USD had 20W - 5L

EUR/JPY had 18W - 7L

These two pairs complimented each other very nicely.
There were only two days that they both lost. Drawdown would have been very small.

Observations:

EUR/JPY would have made more money with a 50 SL and a 40 TP.

Setting one SL and one TP will do much better than your plan of scaling out of the trade. Taking partial profit and letting the rest of the trade run, sounds good, but is almost always less profitable that a single SL and a single TP.

40 SL and 30 TP looks good for the EUR/USD.

This looks really good.

Thanks for sharing it.
  • #3
  • Nov 29, 2008 1:06pm Nov 29, 2008 1:06pm
Thx for the back testing results.
  • #4
  • Nov 29, 2008 4:17pm Nov 29, 2008 4:17pm
I just did November.

EUR/USD 10W - 1L
EUR/JPY 9W - 2L
  • #5
  • Nov 29, 2008 5:47pm Nov 29, 2008 5:47pm
Your Nov. #'s are with what SL & TP?
  • #6
  • Nov 29, 2008 6:04pm Nov 29, 2008 6:04pm
Quoting loophole
Your Nov. #'s are with what SL & TP?
40 SL 30 TP
  • #7
  • Nov 29, 2008 6:19pm Nov 29, 2008 6:19pm
Please can u give me a website where i can get the DOW and Exxon figures daily? Thanks
  • #8
  • Edited 8:05pm Nov 29, 2008 7:20pm | Edited 8:05pm
hi mate...

first of all i wish you luck with ur method..

i`am trading dow since 1 years ago... what i want say that dow can change direction in scnd and fall or move up more than 100 pips...so u can`t follow..

last week if euro follow dow from 74xx even the closed at 88xx i think euro should be at 1.35/1.40... but this week every budy saw that euro stope move with dow...

you can trade euroyen with it not euro...

just my opinion...

good luck
  • #9
  • Nov 29, 2008 7:54pm Nov 29, 2008 7:54pm
Brilliant
  • #10
  • Nov 29, 2008 8:06pm Nov 29, 2008 8:06pm
Quoting abbeylad
Please can u give me a website where i can get the DOW and Exxon figures daily? Thanks
www.google.com

Then click "more" at the top left of the page.
Click "finance"

You can get charts on any stock or index you want.

EXXON = XOM
Dow Jones = DJI
  • #11
  • Nov 30, 2008 9:31am Nov 30, 2008 9:31am
Quoting billbss
www.google.com

Then click "more" at the top left of the page.
Click "finance"

You can get charts on any stock or index you want.

EXXON = XOM
Dow Jones = DJI

Thanks
  • #12
  • Nov 30, 2008 10:10am Nov 30, 2008 10:10am
Quoting loophole
I have been trading this method for a short time with good results. It is based on the correlation between stock prices and currency prices. I hope that over the life of this thread, you will help me improve this method so we can all make lot's of money.

The method for a long trade - At 12:30 PST, 1/2 hour before the NY stock market will close, if the DOW is up at least 1% and Exxon is up any amount, we will trade as follows:
Buy 3 lots on EUR/USD and buy 3 lots on EUR/JPY. Use a 40 pip stop loss for all 6 lots. Close 2 lots at plus 30 and move...
Hi, Pls how can i get the time in GMT, 12:30 PST, 1/2 hour before the NY stock market will close. Thanks.
  • #13
  • Nov 30, 2008 11:30am Nov 30, 2008 11:30am
weekly & monthly chart... waiting for ur comments.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: dow.m.gif Size: 15 KB
  • #14
  • Nov 30, 2008 11:38am Nov 30, 2008 11:38am
daily,weely,and monthly
Attached Image(s) (click to enlarge)
Click to Enlarge Name: euro..d.gif Size: 24 KB
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Click to Enlarge Name: euro..m.gif Size: 23 KB
  • #15
  • Dec 1, 2008 6:15am Dec 1, 2008 6:15am
Quoting loophole
I have been trading this method for a short time with good results. It is based on the correlation between stock prices and currency prices. I hope that over the life of this thread, you will help me improve this method so we can all make lot's of money.

The method for a long trade - At 12:30 PST, 1/2 hour before the NY stock market will close, if the DOW is up at least 1% and Exxon is up any amount, we will trade as follows:
Buy 3 lots on EUR/USD and buy 3 lots on EUR/JPY. Use a 40 pip stop loss for all 6 lots. Close 2 lots at plus 30 and move...
Hi Loophole,

Are you just placing these trades at market price at the end of the USA trading session as long as the Dow is up 1% and Exxon is up on the day?
  • #16
  • Dec 1, 2008 8:13am Dec 1, 2008 8:13am
Hi Loophole,

Thanks for sharing your strategy!

I just have a quick question, if the DOW is up 1% or better and Exxon is DOWN, would this be a NO TRADE day? This also would apply if was reversed.

Thanks again
  • #17
  • Dec 1, 2008 9:08am Dec 1, 2008 9:08am
Quoting Fxcash
Hi Loophole,

Thanks for sharing your strategy!

I just have a quick question, if the DOW is up 1% or better and Exxon is DOWN, would this be a NO TRADE day? This also would apply if was reversed.

Thanks again
I'm sure he'll say it is a no trade day, according to his rules.
That has only happened once in the last three months.
  • #18
  • Dec 1, 2008 9:25am Dec 1, 2008 9:25am
Quoting billbss
I'm sure he'll say it is a no trade day, according to his rules.
That has only happened once in the last three months.

Thanks billbss!

If you could correct me, i'm not sure but if I was to trade the outcome of the DOW and Exxon on Friday Nov. 28 , it would be a NO TRADE following that New York Session (DOW UP and Exxon down). Would this be correct, thanks for the clarification.
  • #19
  • Dec 1, 2008 9:35am Dec 1, 2008 9:35am
Quoting Fxcash
Thanks billbss!

If you could correct me, i'm not sure but if I was to trade the outcome of the DOW and Exxon on Friday Nov. 28 , it would be a NO TRADE following that New York Session (DOW UP and Exxon down). Would this be correct, thanks for the clarification.
I'd have to look at the charts.

If you say it was, I'm sure it was.

When I did my backtest, I skipped Fridays.
I use IBFX and they close on Friday, the same time the stock market does and there is no chance to trade.

I saw EXXON and the Dow in opposite directions only once in three months, looking at Mon-Thurs.
  • #20
  • Dec 1, 2008 11:07am Dec 1, 2008 11:07am
Quoting billbss
I just did a manual backtest, on this, for Sep. and Oct.

I used a simple 40 SL and 30 TP.

EUR/USD had 20W - 5L

EUR/JPY had 18W - 7L

These two pairs complimented each other very nicely.
There were only two days that they both lost. Drawdown would have been very small.

Observations:

EUR/JPY would have made more money with a 50 SL and a 40 TP.

Setting one SL and one TP will do much better than your plan of scaling out of the trade. Taking partial profit and letting the rest of the trade run, sounds good, but is almost always less profitable...
Hi Bill,

Thanks for your effort in back-testing this strategy, and providing some concrete data to support further involvement.

I have a bias against money management whereby the risk is higher than the reward. Yes, I realize the winning % is quite favorable with 40 SL and 30 TP. I'm wondering if there is at least a favorable result using something like a 40 SL and 40 TP?

Best regards,
Bob in Wisconsin
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