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Hedge trading spieler system derived from futures spread trading

  • #2,361
  • Jan 12, 2009 2:59am Jan 12, 2009 2:59am
There's a table with the exact entry and exit points used in this strategy. If you can't find it, let me know and I'll post it again.

Quoting Dreamliner
I have seen Spieler's writing style numerous times, it goes like this: "just go long when rate is down a certain percentage, and watch it go back up and get out at 30%. Simple!"

And their explanations are not any better, they just never seem to be able to communicate in a manner that people can understand. This makes them appear to be much smarter than others, like they can understand things others can't.

Clarity is extremely important when trying to teach people things. Hopefully someone can come along and take what Spieler is saying and clarify...
  • #2,362
  • Jan 12, 2009 6:24am Jan 12, 2009 6:24am
Dear Thread,

Have been rereading this thread (I've probably read it 3 times completely) and have various ideas about what I call, 'Spieler trading.' One of them is to use the FerruFX
indicator (see p.72, post #1070 of the following thread here at FF: http://www.forexfactory.com/showthre...113181&page=72 )

The use of the indicator is to show when the environment is safe to begin a progression. Put up a daily and a four hour chart with the indicator. When both EUR and CHF (the indicator measures % differences between all currencies and shows their relative strengths/weaknesses) are both the same color and same number level or off by only one, then that is the sign of a ranging market that should continue for some time and it's safe to trade EURCHF or the hedge. Let's just start with that.

Lenoxer
  • #2,363
  • Jan 12, 2009 6:26am Jan 12, 2009 6:26am
I realize that I didn't mention that the daily and the 4 hour need not agree. They just need not to be a contradiction to each other.

Lenoxer
  • #2,364
  • Jan 12, 2009 4:52pm Jan 12, 2009 4:52pm
Quoting Dreamliner
I have seen Spieler's writing style numerous times, it goes like this: "just go long when rate is down a certain percentage, and watch it go back up and get out at 30%. Simple!"

And their explanations are not any better, they just never seem to be able to communicate in a manner that people can understand. This makes them appear to be much smarter than others, like they can understand things others can't.

Clarity is extremely important when trying to teach people things. Hopefully someone can come along and take what Spieler is saying and clarify...

The way I see it, it's almost a system based on a contrarian view. There's some profit taking after any larger move usually. Point is to find that level with the current volatility and place a position opposite the trend of the moment and take some profits after there is a small correction. Think of it in terms of S/R and trend lines and how price reacts to them that might make a little more sense.
As Spieler said, he just gave us the basics of the system not all the criteria he uses to enter and exit, and I don't expect him to. If you think about this I'm sure you can incorporate this method into PA trading in one way or another. I've been following this since the beggining of summer and while I don't like purely systematic trading, I am finding appications for the theory this is based on.

Good trading all.
  • #2,365
  • Edited 6:55am Jan 13, 2009 6:25am | Edited 6:55am
Quoting Lenoxer
I realize that I didn't mention that the daily and the 4 hour need not agree. They just need not to be a contradiction to each other.

Lenoxer
Here are the 4H charts for both the eur/usd and usd/chf. Please explain again what we're looking for. The reason I ask is that the EUR/USD is listed as a buy on both charts but there is no listing for USD/CHF. However, the CHF is showing in the green at the bottom of the charts as well as the EUR. The indicator doesn't change values if its on the H4 or D1 chart.
Thanks,
mackus
Attached Image (click to enlarge)
Click to Enlarge Name: eur-usd 4h.gif Size: 15 KB

Attached Image (click to enlarge)
Click to Enlarge Name: usd-chf 4h.gif Size: 17 KB
  • #2,366
  • Jan 13, 2009 4:03pm Jan 13, 2009 4:03pm
Dear Mackus,

It doesn't matter what pairs chart you put up nor the timeframe, the indicator will output the separate currency readings based on the timeframe input in the editor function---and you're looking at the bar chart in the bottom left of the chart and not at the list of buy-sells in the top left. Hence, if you want a 4 hour readout, you can even hit up a EURUSD 1 hour chart and you will get the four hour readout of the currencies as long as 240 is inputted into the editor function of the indicator. The same with the daily readout: input 1440 into the editor function of the indicator, and even if the chart is a EURUSD 1 hour chart, you will get a daily readout of the separate currencies. In the example you show, EUR is a green 2 and CHF is a green 3. Hence, EURCHF is in a tradeable range at this moment with a slight downside bias to the EURCHF. You'd want to check that there is no contradiction to this on the daily. If there's no contradiction, you then have a safe environment in which to begin a Spieler progression---at least for the time being. You can do this on other mean-reverting currencies as well. A caveat, of course: things can always change. Another way of checking for a safe environment is to check option skews of vanilla puts and calls 500 pips out of the money (500 pips only to better see the skew in price between puts and calls, what you can't see so well at ATM strangles.). I certainly don't mean to make things complicated, but after MM, which is the most intensely important thing in this strategy, being able to judge the reversion trading environment comes next.

L.
  • #2,367
  • Jan 14, 2009 5:28am Jan 14, 2009 5:28am
Lenoxer,
Today's indicators are attached below, one for each time frame to match the chart its on. The daily shows Red 6 for EUR and Red 2 for CHF, while the 4 hour shows Green 2 for EUR and Green 3 for CHF. So taken individually only the H4 chart would give us the sign to trade because they are the same color and only 1 level apart, but since the 2 charts are different colors it is automatically don't trade. Am I understanding correctly?
Also, are you intending to use this agreement to determine whether or not to continue a progression that has already started. For instance if I took 3 long positions yesterday would this indicator tell me not to keep adding more based on the rules of the system or are we looking for initial entry confirmation only?

Attached Image (click to enlarge)
Click to Enlarge Name: eur-usd 1d.gif Size: 19 KB

Attached Image (click to enlarge)
Click to Enlarge Name: usd-chf 4h.gif Size: 16 KB
  • #2,368
  • Jan 15, 2009 3:51am Jan 15, 2009 3:51am
Lenoxer,
Today's indicators are attached below, one for each time frame to match the chart its on. The daily shows Red 6 for EUR and Red 2 for CHF, while the 4 hour shows Green 2 for EUR and Green 3 for CHF. So taken individually only the H4 chart would give us the sign to trade because they are the same color and only 1 level apart, but since the 2 charts are different colors it is automatically don't trade. Am I understanding correctly?
Also, are you intending to use this agreement to determine whether or not to continue a progression that has already started. For instance if I took 3 long positions yesterday would this indicator tell me not to keep adding more based on the rules of the system or are we looking for initial entry confirmation only?
-----------------------------------------
Dear Mackus,

1) Question #1: You are correct. No trade. Dangerous environment.
2) Question #2: Good question. I hadn't thought of using the indicator to control the progressions once they began. I have been using it to judge only the initial entry: that the chance to start and end a trade quickly exists now.

Hope this helps. Thanks for the good questions.

Lenoxer
  • #2,369
  • Jan 15, 2009 9:10am Jan 15, 2009 9:10am
Can you attach your indicator that you are using here


Quoting mackus
Lenoxer,
Today's indicators are attached below, one for each time frame to match the chart its on. The daily shows Red 6 for EUR and Red 2 for CHF, while the 4 hour shows Green 2 for EUR and Green 3 for CHF. So taken individually only the H4 chart would give us the sign to trade because they are the same color and only 1 level apart, but since the 2 charts are different colors it is automatically don't trade. Am I understanding correctly?
Also, are you intending to use this agreement to determine whether or not to continue a progression that has...
  • #2,370
  • Jan 15, 2009 11:24am Jan 15, 2009 11:24am
Quoting toddanderson
Can you attach your indicator that you are using here
Its the one from the thread Lenoxer just provided the link to. You can download it from that post.
  • #2,371
  • Jan 16, 2009 6:18am Jan 16, 2009 6:18am
Having closed all long positions beginning on the 13th and being completely out of the market I thought this would be a good time to post some trading results. Here are the results of my demo account opened with $250.00 11/27/2008. Through 1/16/09 there is an account balance of $454.64. I do trade a much higher margin than Spieler suggests, 400:1. Each total position, meaning combined eur/usd and usd/chf is no larger than 4% of the account balance, and recently I backed it down to 3%. I open and close positions based on the original schedule posted by Spieler when possible. However I miss quite a few entries and exits due to work and sleep.
Attached File(s)
File Type: xls 11-27 through 1-16 ok.xls   49 KB | 581 downloads
  • #2,372
  • Jan 23, 2009 9:35am Jan 23, 2009 9:35am
I assume that by the lack of activity in this thread that either most of those that are using the strategy succesfully, are not sharing as there has been some flamming against those supporting this strategy, or, those that have been burnt using it, are fed up and moved on.

Anyone still around?

JC
  • #2,373
  • Jan 23, 2009 2:09pm Jan 23, 2009 2:09pm
JC,

Can't comment if it works or not. I played with it paper trading and had some concerns in the cash management area. As far as the decision making method, under certain market conditions one was to change the % for the levels and for me there was to much room to interpret what % should be used. In addition I found the concept of being married to my computer 24/5 to much of a commitment for my lifestyle.

BR
  • #2,374
  • Jan 27, 2009 3:36am Jan 27, 2009 3:36am
Quoting Waka
I assume that by the lack of activity in this thread that either most of those that are using the strategy succesfully, are not sharing as there has been some flamming against those supporting this strategy, or, those that have been burnt using it, are fed up and moved on.

Anyone still around?

JC
Still around. Just plugging away trying to see if there are ways to tweak the system for better results.
  • #2,375
  • Edited 7:31am Jan 28, 2009 7:19am | Edited 7:31am
2 responses in 5 days and I hardly ever see people in the thread. This could have been a good thread, something different. Unfortunately many had a lack of understanding of the fundamentals, not the strategy, which let it down.

Quoting Big1red9
JC,

Can't comment if it works or not. I played with it paper trading and had some concerns in the cash management area. As far as the decision making method, under certain market conditions one was to change the % for the levels and for me there was to much room to interpret what % should be used. In addition I found the concept of being married to my computer 24/5 to much of a commitment for my lifestyle.

BR
I understand and share your concerns. The current strategy does call for a wealthy margin and there are many gaps in the understanding of hedging/divergence that are not clarified in this thread, which makes for concerns when some use the strategy and loose £1000 over night without testing/understanding first.

Fortunately most of us are married to our PC's during working hours. Or maybe that should be unfortunately ;-)

The reality with this strategy is that it has the same risks as trading any security that oscillates. And which security doesn't. Instead of buying low and selling high or visa versa with a single pair, this strategy is effectively doing the same, only with the divergence chart. In this case you hedge at divergence low and close at high and visa versa. Plot divergence over a long term and things become clearer. Daily divergence is not good enough as it hides the bigger picture and divergence trend. I gather that many lost pips because the daily divergence also hides the important fact that divergence rarely returns back to "0 point". From reading Spieler's posts, he understood this, however from what I can gather, he has learnt to work around the daily divergence short-comings.

mackus, you seem like one of the few who have made the strategy work. kudos to you. I have been developing my understanding of hedging and I too have been focusing the strategy to my needs. Hope it brings us many pips.

JC
  • #2,376
  • Jan 28, 2009 8:12am Jan 28, 2009 8:12am
Additionally there is a language barrier issue which presents terms such as hedge and divergence which as defined in American English language have nothing to do with this method.

When you add that Spieler long ago randomly answered questions and is not around to mentor, its a lot to swallow.

He does not have the time or chooses not to help unless this has gone off the board and into private to avoid the trolls that kill threads by upsetting the people sharing.

BR
  • #2,377
  • Jan 28, 2009 8:22am Jan 28, 2009 8:22am
Quoting Big1red9
Additionally there is a language barrier issue which presents terms such as hedge and divergence which as defined in American English language have nothing to do with this method.

When you add that Spieler long ago randomly answered questions and is not around to mentor, its a lot to swallow.

He does not have the time or chooses not to help unless this has gone off the board and into private to avoid the trolls that kill threads by upsetting the people sharing.

BR
I didn't want to mention it, but I agree.
  • #2,378
  • Jan 29, 2009 3:11am Jan 29, 2009 3:11am
I was wondering if you are using a larger decorrelation percentage, more than the .25%, to start your hedge lately since it seems that there is quite a bit more volatility now than last summer/fall? If so what percentage are you using?
Thanks
  • #2,379
  • Jan 30, 2009 1:13pm Jan 30, 2009 1:13pm
i have been following the original method for quite a while but the drawdown got me scared during the november trend and got caught in it but managed to escape by being patient.

Now i am using a variation of the method which is much easier and less drawdown..
i am using a MA cross on the daily chart eurchf and buying and selling the hedge at the time of the cross.
Building position from the cross and exiting at the next cross.

try it out, less stress.....not using the divergence indicator at all.

thx
t
  • #2,380
  • Jan 30, 2009 7:20pm Jan 30, 2009 7:20pm
Quoting teldon
i have been following the original method for quite a while but the drawdown got me scared during the november trend and got caught in it but managed to escape by being patient.

Now i am using a variation of the method which is much easier and less drawdown..
i am using a MA cross on the daily chart eurchf and buying and selling the hedge at the time of the cross.
Building position from the cross and exiting at the next cross.

try it out, less stress.....not using the divergence indicator at all.

thx
t
Hi teldon

Not a dig at your method, but could you elaborate on your reasoning, because as I see it, you're simply leaving the hedge to chance for making pips.

What MA period are you using, I'd like to see what you're seeing?

Cheers,

JC
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