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Hedge and Correlation Strategy

  • #261
  • Jul 11, 2009 4:17pm Jul 11, 2009 4:17pm
Quoting Dreamliner
No, you didn't hijack my thread, I did . I'm glad you came along.

OK, we'll brace for the experts .

Please post the new thread URL on here when you open it, ok?
ok, will do.
  • #262
  • Jul 13, 2009 9:07am Jul 13, 2009 9:07am
Quoting scooby-doo
ok, will do.
scooby-doo,

Appreciate what you shared about how you are trading the EURUSD USDCHF with the use of the EURCHF with the EMAs.

Please continue to share either here or on your own thread...

It is very helpful to see how you are doing this.

Thanks
Bruce
  • #263
  • Jul 14, 2009 1:54pm Jul 14, 2009 1:54pm
Quoting brucech
scooby-doo,

Appreciate what you shared about how you are trading the EURUSD USDCHF with the use of the EURCHF with the EMAs.

Please continue to share either here or on your own thread...

It is very helpful to see how you are doing this.

Thanks
Bruce
Cheers,

This is a duplicate trade from my live account that i placed early this morning.

I will start a new thread asap.
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  • #264
  • Jul 14, 2009 7:50pm Jul 14, 2009 7:50pm
Hey Dreamliner, I started using pretty much the exact strategy you outlined in post #1 about a month ago. I've toyed around with Euro/Cable, E-Chf/G-Chf and Eppy/Geppy, primarily focusing on Euro/Cable. (I have a real job, so trading too many pairs during the day is difficult!)

Over the past 4-5 weeks I've executed roughly 30 trades, and literally every one of them has been profitable. Seriously. Every one. Of course, each trade is really a set of trades (since we're kinda hedging here) and some individual trades have obviously been losers, but the sets as a whole have all been successful.

I use the daily fx chart on a 30 minute timeframe displaying the last 300 bars. I phase in to each position, never using more than %20 of one "position" with each entry. This allows me to execute 5 entires before I'm in for one full position.

Now, I've been trading forex long enough to know that the %100 run won't last, but.. it's still fun while it lasts!

I don't have anything new to add to this thread. Just thought I'd chime in.

Thanks!
  • #265
  • Jul 14, 2009 8:08pm Jul 14, 2009 8:08pm
Thanks for chiming in! I've never lost on this either, though I don't like the drawdown sometimes.

I don't understand your statement below that you trade on the daily chart, 30 minute timeframe.

Also, what means do you use to phase in?

Quoting girdle66
Hey Dreamliner,...
  • #266
  • Edited 8:27pm Jul 14, 2009 8:23pm | Edited 8:27pm
Quoting Dreamliner
Thanks for chiming in! I've never lost on this either, though I don't like the drawdown sometimes.

I don't understand your statement below that you trade on the daily chart, 30 minute timeframe.

Also, what means do you use to phase in?
Sorry, I should have stated that more clearly. What I meant was "I trade on the dailyfx.com chart, 30m timeframe, etc..."

So far I haven't had to nail down exact entries. If I see that the currencies diverged for a spell, I add one entry to both currencies. If they continue to diverge and eventually there's at least 100 pip difference between my first entries, I'll start watching for a second entry. I think there was one time when I had 3 entries open at once, but usually I get a cross after my first or second entry.

I'm trading this system with real money... but not very much of it. I'm using oanda right now with just a couple hundred bucks.

Hope that clarifies it. Thanks!

I should also say that I don't always wait for a cross to close my trades. Sometimes the gap closes and then the pairs start correlating again, so I close my positions with a profit. As I use this system more I may take a more disciplined approach, but for now, it's working splendidly.
  • #267
  • Jul 14, 2009 8:26pm Jul 14, 2009 8:26pm
Thanks for clarifying; that's exactly what I'm doing.

I'm sure there will come a time when the correlation will go entirely out of whack, but it's nice to not lose isn't it? Shhh, don't tell those who don't like hedging like this .

Quoting girdle66
Sorry, I should have stated that more clearly....
  • #268
  • Jul 14, 2009 8:35pm Jul 14, 2009 8:35pm
By the way, when do you take profit? How much of a cross?
  • #269
  • Jul 14, 2009 9:47pm Jul 14, 2009 9:47pm
Quoting Dreamliner
By the way, when do you take profit? How much of a cross?
Eh, it depends. I try not to tie myself too closely to rules. It's better to keep ones head in the market instead of focused on a set of rules. But, as soon as I see a cross I'll close the positions, if not before the cross even takes place. Greed kills.
  • #270
  • Jul 14, 2009 9:47pm Jul 14, 2009 9:47pm
Quoting Dreamliner
Thanks for clarifying; that's exactly what I'm doing.

I'm sure there will come a time when the correlation will go entirely out of whack, but it's nice to not lose isn't it? Shhh, don't tell those who don't like hedging like this .
I'm glad to hear we're doing the same thing. I've only been doing it a month or so, but you've been doing it for several. That's a good sign.
  • #271
  • Jul 15, 2009 12:08am Jul 15, 2009 12:08am
Quoting scooby-doo
Cheers,

This is a duplicate trade from my live account that i placed early this morning.

I will start a new thread asap.
scooby-doo,

Great! Thanks for the picture.
I have put the EMA25 AND EMA50 on my charts but get charts that don't look at all like yours.

Bruce
Attached Image (click to enlarge)
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  • #272
  • Jul 15, 2009 2:33am Jul 15, 2009 2:33am
I need some explanation:

I should exit when currencies cross each other, yes? It means - when currencies meets (touch) each other or when as Dreamliner wrote in the first post:

when the currency pairs cross (the one that was on the bottom is now on top, the one that was on the top is now on the bottom) ?

I always existed when currencies meet and touch each other.
  • #273
  • Jul 15, 2009 2:42am Jul 15, 2009 2:42am
Also, why don't you guys (most of you, especially those profitable using this method) don't post any charts?

It would be really nice to see some charts posted in the style I use - 1st chart with entry, 2nd chart with exit.

This way we learn much more, I think, than just talking.
  • #274
  • Jul 15, 2009 4:54am Jul 15, 2009 4:54am
Quoting T.E.Lawrence
Also, why don't you guys (most of you, especially those profitable using this method) don't post any charts?

It would be really nice to see some charts posted in the style I use - 1st chart with entry, 2nd chart with exit.

This way we learn much more, I think, than just talking.
I'll start taking snapshots and posting them here, good idea.
  • #275
  • Jul 15, 2009 7:31am Jul 15, 2009 7:31am
What about setting dailyfx netdania chart this way:

eur/usd and than right click menu 'ralative to' gbp/usd ?

P.S.

When overlaying currencies do you use line chart, so eur and cable are presented same way?
  • #276
  • Jul 15, 2009 10:35am Jul 15, 2009 10:35am
Quoting T.E.Lawrence
What about setting dailyfx netdania chart this way:

eur/usd and than right click menu 'ralative to' gbp/usd ?

P.S.

When overlaying currencies do you use line chart, so eur and cable are presented same way?
I do not know what the "relative to" feature does, worth checking into though. Let us know if you discover anything.
  • #277
  • Jul 15, 2009 12:22pm Jul 15, 2009 12:22pm
Quoting girdle66
I'll start taking snapshots and posting them here, good idea.
Here's a snapshot, it's a little rough, sorry. You can see in the chart my two entries indicated by the vertical blue lines. I sold the top pair (cable) and bought the bottom pair (euro) at the same time in both entries.

The lines are now getting pretty close together, I'll probably close all positions later this afternoon or tonight. But, as you can see from my positions along the bottom of the picture, I'm quite profitable already.

As you can see looking at the rest of the chart, it's been a good week. A good couple of weeks, actually.
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  • #278
  • Jul 15, 2009 12:25pm Jul 15, 2009 12:25pm
That's excellent, thank you for the pictures, that's the way I trade.

Wait til you see my snapshot of a trading another pair, just waiting for it to cross all the way. Very profitable.
  • #279
  • Jul 15, 2009 12:29pm Jul 15, 2009 12:29pm
Quoting Dreamliner
That's excellent, thank you for the pictures, that's the way I trade.

Wait til you see my snapshot of a trading another pair, just waiting for it to cross all the way. Very profitable.
dl: how do you deal if for the hedge pair, one move away from your target, and other don't move... leaving difference even larger.

just wait?
  • #280
  • Jul 15, 2009 12:38pm Jul 15, 2009 12:38pm
Quoting billye
dl: how do you deal if for the hedge pair, one move away from your target, and other don't move... leaving difference even larger.

just wait?
I average in, up to 5 times. Eventually it returns. Not that it has to (disclaimer: there is risk in forex trading), but it is statistically probably. And that is all that is needed for an edge.
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