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Dow Correlation

  • #41
  • Dec 1, 2008 3:38pm Dec 1, 2008 3:38pm
Quoting Eureka
I wonder if this system could work with GBP or other currencies.

Thanks, loophole for bringing this system to us. I love it already.

Carol
It will work just as good with GBP/JPY. I don't use G/J because the spread is to high.
  • #42
  • Dec 1, 2008 4:08pm Dec 1, 2008 4:08pm
Thanks. Yes, G/J does have a larger spread.

Carol
  • #43
  • Dec 1, 2008 4:15pm Dec 1, 2008 4:15pm
Quoting bigbear777
Just placed a test trade at 3:30 and now 4PM all trades closed + 40 pips each total 80pips! So for so good. I hope this works long term.
Where did you hear about this method?
I have been trading the news for about 4 years. There has always been a positive correlation between the DOW and certain currency pairs for as long as I have been a news trader. The correlation is now the strongest that I have ever seen. After spending many many hours back testing, and looking at charts, I came up with this system. To me, this system is a fundamental analysis system. I do not believe that technical analysis can work unless the trader does it on a full time basis.
  • #44
  • Dec 1, 2008 4:25pm Dec 1, 2008 4:25pm
Without a long back test, my gut tells me that this system will only last as long as the current high volatility lasts. So let's enjoy this temporary taste of the GRAIL while it's still here.
  • #45
  • Dec 2, 2008 5:33pm Dec 2, 2008 5:33pm
Ho Loophole,

My Oanda platfrom was seizing up on me, and the trades were nor developing very well so I closed out for 1 pip profit on EJ and 10 pips profit on EU. Not too great, but I can remember many times when I wised for 10 pips profit in a day's trading.

Is there sort of a time frame in which the trades should have hit either the SL or TP and you close them out because of low volatility?

Bob
  • #46
  • Dec 2, 2008 11:45pm Dec 2, 2008 11:45pm
Quoting Bobcat2
Ho Loophole,

My Oanda platfrom was seizing up on me, and the trades were nor developing very well so I closed out for 1 pip profit on EJ and 10 pips profit on EU. Not too great, but I can remember many times when I wised for 10 pips profit in a day's trading.

Is there sort of a time frame in which the trades should have hit either the SL or TP and you close them out because of low volatility?

Bob
I wait for SL or TP til next trade
  • #47
  • Dec 3, 2008 3:32pm Dec 3, 2008 3:32pm
Was following this thread and was glas I did. The strat looks real good and was looking forward to getting on board this evening but looks like i'l have to wait till tomorrow!

Cheers for the system Loophole!

  • #48
  • Dec 3, 2008 7:22pm Dec 3, 2008 7:22pm
Hi Loophole,

1/2 hour before the stock market close, the Dow was up (but less than 1%), and Exxon was also up. So...I didn't consider this a valid trade according to the rules.

However, within about 10 minutes or so, the Dow was up more than 1% and Exxon was also up. Consequently the price moved up enough to have made profits on both EU and EJ.

Would you have made the trade given the criteria were in place before the market close? Or did I do the correct thing by sitting on the sidelines?

Also, why do we use Exxon and not the broader international oil price?

Wouldn't the USD/CAD currency pair also lend itself to your trading strategy?

Many thanks,
Bob
  • #49
  • Dec 3, 2008 10:45pm Dec 3, 2008 10:45pm
Quoting Bobcat2
Hi Loophole,

1/2 hour before the stock market close, the Dow was up (but less than 1%), and Exxon was also up. So...I didn't consider this a valid trade according to the rules.

However, within about 10 minutes or so, the Dow was up more than 1% and Exxon was also up. Consequently the price moved up enough to have made profits on both EU and EJ.

Would you have made the trade given the criteria were in place before the market close? Or did I do the correct thing by sitting on the sidelines?

Also, why do we use Exxon and not the broader international...
I did not take the trade at 12:30 because at 12:30 the DOW was not up at least 1%. However, 10 min later, when the DOW was up at least 1% and it was still before 1:00, I did take the trade. E/J and E/U correlate better with the DOW that does U/CAD. Exxon would give the same results as the
broader index would.
  • #50
  • Dec 4, 2008 3:17am Dec 4, 2008 3:17am
Quoting loophole
I did not take the trade at 12:30 because at 12:30 the DOW was not up at least 1%. However, 10 min later, when the DOW was up at least 1% and it was still before 1:00, I did take the trade. E/J and E/U correlate better with the DOW that does U/CAD. Exxon would give the same results as the
broader index would.
Do you think you need to revise your rules?

If you take a trade when the Dow is not up or down at least 1% at 3:30 EST, then what exactly is your criteria?
  • #51
  • Dec 4, 2008 3:17am Dec 4, 2008 3:17am
Loophole,

Thank you for your clear explanation...my instincts were right, although I didn't take the trade. Next time I will!

Love your thread!

Bob
  • #52
  • Dec 4, 2008 11:42am Dec 4, 2008 11:42am
Quoting billbss
Do you think you need to revise your rules?

If you take a trade when the Dow is not up or down at least 1% at 3:30 EST, then what exactly is your criteria?
What happened yesterday is very rare. I will revise the rules as follows. If at any time between 12:30 and 1:00 PST, the Dow is + or - at least 1% and Exxon is in the same direction any amount, I will take the trade.
  • #53
  • Edited Dec 5, 2008 10:46am Dec 4, 2008 4:32pm | Edited Dec 5, 2008 10:46am

WINNER WINNER CHICKEN DINNER
Two more winners today. It took a little longer than usual, but
E/J & E/U both paid off.
  • #54
  • Dec 5, 2008 10:01am Dec 5, 2008 10:01am
Loophole, Thanks for sharing your ideas.

I am probably not the only person who has this question (and it may be a stupid one).... Can you tell me (or point me to a resource that will explain it) why the E/U and E/J react to the Dow and XOM? What is the realtionship.

Thanks again. This a good thread.
  • #55
  • Edited 10:30am Dec 5, 2008 10:17am | Edited 10:30am
Quoting loophole

WINNER WINNER CHICKEN DINNER
Two more winners today. It took a little longer than usual, but
E/J & E/U both paid off. For the week, here are the results for TP 30----SL 40

E/J - W4 = plus 120 pips
U/J - W4 = plus 120 pips
Total for 4 days trading = 8 winners and zero losses = 240 pips profit
Last Tuesday, Dec.2 was a loser- both currencies got stopped out.

I would call Wednesday a no trade day.. It required a rule change, after the fact, to make it a winner.
  • #56
  • Dec 5, 2008 11:09am Dec 5, 2008 11:09am
Quoting billbss
Last Tuesday, Dec.2 was a loser- both currencies got stopped out.

I would call Wednesday a no trade day.. It required a rule change, after the fact, to make it a winner.

Bill,

I concur...your synopsis is exactly what happened to me. Going back to the very first post by Loophole, apparently the rules support a Friday trade. My concern is that the forex market closes not that much later in the day after the NY Stock Market. Given all that, and the fact this is "Freaky Friday", would you avoid trading, today?

Much appreciated,
Bob
  • #57
  • Dec 5, 2008 11:13am Dec 5, 2008 11:13am
Quoting Bobcat2
Bill,

I concur...your synopsis is exactly what happened to me. Going back to the very first post by Loophole, apparently the rules support a Friday trade. My concern is that the forex market closes not that much later in the day after the NY Stock Market. Given all that, and the fact this is "Freaky Friday", would you avoid trading, today?

Much appreciated,
Bob
I wouldn't trade because I use IBFX.
IBFX and the market close at the same time on Friday.

I MIGHT trade if I had a couple of hours to let it run- not sure.
  • #58
  • Dec 5, 2008 11:24am Dec 5, 2008 11:24am
Quoting billbss
Last Tuesday, Dec.2 was a loser- both currencies got stopped out.

I would call Wednesday a no trade day.. It required a rule change, after the fact, to make it a winner.
Last week I changed to the Phil Newton scale out method.
Exit 2/3 at 1/2 SL. On 12-2 both were 20 pip winners before the SL was hit. Sorry for the confusion.
  • #59
  • Dec 5, 2008 11:27am Dec 5, 2008 11:27am
Quoting Skygod
Loophole, Thanks for sharing your ideas.

I am probably not the only person who has this question (and it may be a stupid one).... Can you tell me (or point me to a resource that will explain it) why the E/U and E/J react to the Dow and XOM? What is the realtionship.

Thanks again. This a good thread.
It has to do with risk aversion and fundamental analysis.
  • #60
  • Dec 5, 2008 11:49am Dec 5, 2008 11:49am
I’ve check this forum and by the way, I would like to know how do you make of the index a strong criteria to take your forex decisions. I’ve been just trading in a nice trial but I only check the currencies performance. Please, let me know how to use index, is it related to the fundamental analysis?
Thanks! Hope to learn a lot.
Vanessa
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