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Hedge and Correlation Strategy

  • #401
  • Jul 28, 2009 5:35am Jul 28, 2009 5:35am
Quoting T.E.Lawrence
Anyway, we're making money somehow.
...which is nice.
I am not telling you not to do so. Just so you know the risks and what can you expect one day and why... good luck!
  • #402
  • Jul 28, 2009 5:43am Jul 28, 2009 5:43am
Quoting hotstorm
I am not telling you not to do so. Just so you know the risks and what can you expect one day and why... good luck!
I know, that's why I'm trying to implement some confirmation techniques, like checking ordinary charts to see if a pair is at some resistance / support level.
  • #403
  • Jul 28, 2009 6:54am Jul 28, 2009 6:54am
That was my initial thought and image in my head!

Quoting T.E.Lawrence
From my experience it's a zombie trade - it moves, but it's already dead.

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  • #404
  • Jul 28, 2009 7:04am Jul 28, 2009 7:04am
Closed trades in the last 24 hours. All sets turned out positive.

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  • #405
  • Jul 28, 2009 7:07am Jul 28, 2009 7:07am
Quoting T.E.Lawrence
Ok, looks like the gap has stopped expanding. New entry:

Attachment
I've just quit this trade - +73 pips. My previous entry brought -24 pips loss, so my outcome is +49 pips.



Which is nice.
  • #406
  • Jul 28, 2009 7:15am Jul 28, 2009 7:15am
Quoting jeffreytp
Closed trades in the last 24 hours. All sets turned out positive.

Attachment
Congratulations.

Keep it up and sooner or later.........:
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  • #407
  • Jul 28, 2009 7:24am Jul 28, 2009 7:24am
What brokers do you use guys?
  • #408
  • Jul 28, 2009 7:31am Jul 28, 2009 7:31am
Quoting T.E.Lawrence
You mean it's a losing trade?
If I were to close it now, yes it would be a losing trade. But since I am not closing it now, it is drawdown. If you have noticed, it is indeed heading back the correct way now. I will wait to close in a profit.
  • #409
  • Jul 28, 2009 7:35am Jul 28, 2009 7:35am
You'll find people love to tell you how you can't make money with this system. I'm up over 200 pips since Sunday. Some people just can't understand what we're doing. Or rather they love to tell us we can't do what we're doing .

Quoting T.E.Lawrence
Anyway, we're making money somehow.















...which is nice.
  • #410
  • Jul 28, 2009 7:36am Jul 28, 2009 7:36am
Quoting T.E.Lawrence
What brokers do you use guys?
I use Oanda, IBFX, and Forex.com. I use these 3 because I trade both correlated and non-correlated.
  • #411
  • Jul 28, 2009 7:39am Jul 28, 2009 7:39am
Quoting jeffreytp
Closed trades in the last 24 hours. All sets turned out positive.

Attachment
Hey Jeffreytp, don't you know you can't do that? You're just trading one pair, you're caught in ranging markets, and you're not figuring spread, and not etc. etc.

Just kidding. Nice work!
  • #412
  • Jul 28, 2009 8:23am Jul 28, 2009 8:23am
Quoting stevegee58
Hey jm1941 and markfx,

Earlier you guys mentioned a chart setup where you "zeroed out" the overlaid pairs at some low volatility time. How are you doing that mechanically? i.e. is it using the dailyfx charts or are you doing it on MT4?

I'm using a custom indicator that lets you throw up 2 pairs and invert one if it's negatively correlated. I was thinking along the same lines y'all were with regard to a zero-out starting point. But I'm not seeing how to do this with my setup.
What I am doing is taking Pair 1 and subtracting the weekly (or daily) open, then taking Pair 2 and doing the same. That will zero them out and you can track their progression from there. I was zeroing daily but now it looks like weekly would be a better bet.

I have phase 1 of my indicator done and ready, but it was too late last night to post it with instructions etc, so I'm planning to do that tonite.
  • #413
  • Jul 28, 2009 8:26am Jul 28, 2009 8:26am
Quoting T.E.Lawrence
What brokers do you use guys?
FXDD
  • #414
  • Jul 28, 2009 8:26am Jul 28, 2009 8:26am
Quoting Jm1941
What I am doing is taking Pair 1 and subtracting the weekly (or daily) open, then taking Pair 2 and doing the same. That will zero them out and you can track their progression from there. I was zeroing daily but now it looks like weekly would be a better bet.

I have phase 1 of my indicator done and ready, but it was too late last night to post it with instructions etc, so I'm planning to do that tonite.
I definitely agree that weekly would be better for the zeroing out. Thanks for your hard work on the indicator, looking forward to seeing it. Please post it in mt4 or ex4 for us who have a hard time compiling. thank you.
  • #415
  • Jul 28, 2009 11:03am Jul 28, 2009 11:03am
Quoting hotstorm
...
This is just to show that trading EURUSD vs. USDCHF you are not hedging anything, you trade EURCHF...
Your example is not correct. The USD's don't cancel themselves out. You're either long or short the dollar vs the other two. And you still miss the point of playing the spread between the 2 pairs. The charts are basically just an indicator of how you may want to play it. There's no guarrenty that the spread will widen or narrow but the charts give you a good idea which way they might go just by looking at the past history. If you were just looking at a chart of one pair, you have a much more difficult time deciding whether it'll go up or down. Just being able to compare it with another pair is what's helpful. It helps put the odds more in your favor.

Seems like more and more people are getting it so something is working.

think outside the box
  • #416
  • Jul 28, 2009 4:06pm Jul 28, 2009 4:06pm
Not bad for a few minutes of work. How long can this go on???????

7-28-09

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  • #417
  • Jul 28, 2009 4:12pm Jul 28, 2009 4:12pm
Thumbs up my friend. Good work. Hit and run! Just like robbin the bank.
  • #418
  • Jul 28, 2009 4:47pm Jul 28, 2009 4:47pm
Well done.

All those bank traders must have been doing something wrong for a very long time. With this strategy, everyone, sooner or later should be very rich.

  • #419
  • Jul 28, 2009 5:13pm Jul 28, 2009 5:13pm
Nice setup for a trade here...
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  • #420
  • Jul 28, 2009 6:35pm Jul 28, 2009 6:35pm
Quoting stevegee58
Hey jm1941 and markfx,

Earlier you guys mentioned a chart setup where you "zeroed out" the overlaid pairs at some low volatility time. How are you doing that mechanically? i.e. is it using the dailyfx charts or are you doing it on MT4?

I'm using a custom indicator that lets you throw up 2 pairs and invert one if it's negatively correlated. I was thinking along the same lines y'all were with regard to a zero-out starting point. But I'm not seeing how to do this with my setup.
Stevegee,

Sorry, I missed your post asking about this. I use the thinkorswim platform for some of my trading. They have their own proprietary charts (not MT4) and they have a setting that allows you to set it to "Percentage View". That sets the "start time" or the chart to zero for both pairs. Then I do a "comparison" study and enter in the second pair and that throws the 2 charts together. The I do a "Spread" study which shows the difference between to 2 pairs in a seperate window. I would think that a good programmer could create an indicator that does this on MT4 too but I've yet to find one. So, I'm stuck with having multiple thinkorswim charts, multiple MT4 charts and even Oanda charts if I'm trading with them at the time. And that doesn't even the charts I may be watching for stocks or commodities. 2 23" monitors don't come close to giving me the room I'd like.

I wish I knew more about coding indi's. I'd like to see a few things done. I'm still wrapping my head around this "pairs of pairs trading" so I'm not sure exactly what's needed but if anyone has the skills we can talk. Let me know if you have any questions on TOS. I'm not an expert but I'm learning.

Happy trading
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