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Hedge and Correlation Strategy

  • #441
  • Jul 29, 2009 11:22pm Jul 29, 2009 11:22pm
Quoting jeffreytp
You're right, this "system" doesn't work : (

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Damn, just see what I missed today!!!

((nicely done))
  • #442
  • Jul 30, 2009 12:18am Jul 30, 2009 12:18am
Quoting markfx
Ok, then I'll apologize to everyone here for that "divergence". Maybe we can deal with what really matters....trading and learning. You're just as welcome here as anyone else as far as I'm concerned. It's 777's thread so if he feels it's taking away from the purpose of the thread then he'll say so and I hope everyone would ablige.

I didn't have much time to spend in front of the computer today so maybe I'll have time tonight/tomorrow.

Some interesting setups today though. The spread narrowed some on the U/C vs E/U. They've been running in...
Well I'll answer. I'm up over 400 pips since Sunday on live trading. I've kept track of every trade this week and will post them at the end of the week.

P.S. It's a 787, not a 777 .
  • #443
  • Jul 30, 2009 1:01am Jul 30, 2009 1:01am
Quoting markfx
I never said I trade these long/long or short/short. That's where you were incorrect. I said just the opposite and you still didn't get it. You just assumed that that's what we were doing because as you say "these pairs are usually traded long/long or short/short". Read and comprehend before you post something that basically insinuates that we're all a bunch of fools. We're exploring alternative ways to look at things. Things that may not "usually" be done. Oh damn, I just admitted to not being a conformist....
Although I said I would not post here anymore, I will give you one more opinion of mine. Dreamliner's system of trading the gap is overlaying two charts of positively correlated pairs EURUSD and GBPUSD. When there is a gap he goes either short/long or long/short. That makes sense and that is "correlation and hedge" system, although he is just trading EURGBP. If you open 1 lot of each currency, then it goes in direction of EURGP but the pip difference is not equal to EURGBP move just because of the lot sizes used that do not cancel USD entirely, only partially. To cancel USD totally, one would have to calculate the lot size according to my example I posted earlier (it depends on the rate ratio of EURUSD and GBPUSD).

Quoting Dreamliner
"These pairs are usually traded long/long or short/short..." Another interesting statistic is that 95% of traders fail. I wonder if there could be a correlation (no pun intended)?
Now, if you want to trade the gap using EURUSD and USDCHF you should overlay them but invert one of the currencies. Then, when you see the gap you should either go long/long or short/short. Hence, you would trade EURCHF.

If you trade long/short or short/long you just double your risk as I mentioned above.

Good luck, you will need it!
  • #444
  • Jul 30, 2009 1:07am Jul 30, 2009 1:07am
Hotstorm, I for one appreciate your thoughts and am not offended whatsoever.

However, it has been proven over and over, that when you trade these currencies you are not doing the same as trading just one currency. I've seen study after study showing that while you may be going in the general direction of the one currency you are not doing the same as trading the one.

Other than that, there's no sense continuing this discussion. I'm making nearly 2000 pips a month with this system, so it can be done. And your warnings are important too. So there's no point in continuing these discussions.

Quoting hotstorm
Although I said I would not post here anymore, I will give you one more opinion of mine. Dreamliner's system of trading the gap is overlaying two charts of positively correlated pairs EURUSD and GBPUSD. When there is a gap he goes either short/long or long/short. That makes sense and that is "correlation and hedge" system, although he is just trading EURGBP. If you open 1 lot of each currency, then it goes in direction of EURGP but the pip difference is not equal to EURGBP move just because of the lot sizes used that do not cancel USD entirely,...
  • #445
  • Jul 30, 2009 1:59am Jul 30, 2009 1:59am
My today's trade:

Attached Image (click to enlarge)
Click to Enlarge Name: chart.jpg Size: 75 KB


swissy - short & euro -long (both 10 000 units).
  • #446
  • Jul 30, 2009 2:02am Jul 30, 2009 2:02am
When checking mataf.net for correlations - are you looking at 1h or daily correlations?
  • #447
  • Edited 3:19am Jul 30, 2009 2:40am | Edited 3:19am
Quoting T.E.Lawrence
My today's trade:

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swissy - short & euro -long (both 10 000 units).
I got out of this trade - it went against me -30 pips. Will wait for a better entry.
  • #448
  • Jul 30, 2009 6:27am Jul 30, 2009 6:27am
Quoting weekapaugh
Hey JM, awesome indicators, great work. I have a stupid question though, what font are you using in your screen screen shots? When I load mine it uses the system one and some of the descriptions run over each other for the variance indi.
It's using the "LCD" font. I thought it was a system font but maybe not. Here it is...
Attached File(s)
File Type: zip LCD.zip   38 KB | 657 downloads
  • #449
  • Jul 30, 2009 7:35am Jul 30, 2009 7:35am
Quoting T.E.Lawrence
My today's trade:

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swissy - short & euro -long (both 10 000 units).

Hi Lawrence,

do you realize how big risk you are taking ? Sell U/CH, Buy E/U ? have you checked history ? i dont want to scare you but you can easily finish in drawdown 2500 pips E/U and 2500 pips U/CH, so what would be profit loss ratio ?
Browsing forexfactory since 2006
  • #450
  • Jul 30, 2009 7:42am Jul 30, 2009 7:42am
Quoting rtx
Hi Lawrence,

do you realize how big risk you are taking ? Sell U/CH, Buy E/U ? have you checked history ? i dont want to scare you but you can easily finish in drawdown 2500 pips E/U and 2500 pips U/CH, so what would be profit loss ratio ?
That's why I'm using money management and exiting a trade if it goes against me -20 or -30 pips.
  • #451
  • Jul 30, 2009 7:45am Jul 30, 2009 7:45am
Quoting jeffreytp
You're right, this "system" doesn't work : (

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Hi Jeffreytp

If im right your "doesnt work" was ironic, but as i can see you trade basket of currencies, and 29th you made profit 450 usd with 10k what is aprox 45 pips .. so it almost nothing if you trade 5- 6 pairs cause as i wrote in my previous post you have to known well history of each pair, year 08 was really crazy maybe craziest ever and if situation will repeat maybe 40 % of its "strenght" you can easily have dd 1500 - 2000 pips on each pair, with your 5 -6 pairs ... it would be much more then 450 usd i only would like to warn you cause few months ago i was doing backtests and it was very crazy.

Lots of you are trading E/U vs G/U, but who tried backtest that big long on E/U from dec 08 ???? did you realize that G/U didnt make such long spike ?

do you realize that since 5th Dec 08 till that highs in next days euro went long 1900 pips !!!!!!!!! and G/U was choppy ?

so lets say you had seen "opportunity" make sell vs long on 5th Dec, on 18th dec your drawdown would be 1900 pips ... what next ? this thread would be dead,

dont want to teach you all or dont want to make fun of you or dont want to say your strategy is not good.... only would like to advice you make backtests and youll have clear vision after few back test and after backtest on e/u vs u/ch noone will go Long/short i bet
Browsing forexfactory since 2006
  • #452
  • Jul 30, 2009 7:47am Jul 30, 2009 7:47am
Quoting T.E.Lawrence
That's why I'm using money management and exiting a trade if it goes against me -20 or -30 pips.
thats very good, but your pairs and directions are very aggresive usd dirrection, so be careful and try make some backtests
Browsing forexfactory since 2006
  • #453
  • Jul 30, 2009 7:53am Jul 30, 2009 7:53am
Quoting Dreamliner
Well I'll answer. I'm up over 400 pips since Sunday on live trading. I've kept track of every trade this week and will post them at the end of the week.

P.S. It's a 787, not a 777 .
whoops, my bad I should have caught that. Now if Boing can just get it together so we can fly one.

good trading though. really good.
  • #454
  • Jul 30, 2009 7:57am Jul 30, 2009 7:57am
Quoting T.E.Lawrence
When checking mataf.net for correlations - are you looking at 1h or daily correlations?

daily
  • #455
  • Edited 8:22am Jul 30, 2009 8:09am | Edited 8:22am
Quoting markfx

Anyone make much on these spreads today. Anyone care to admit to losing? LOL

Gotta run...
Yep; took quite a hit on USDCHF/EURUSD yesterday. That's why I'm still demoing this.

Jeffery TP seems to have it figured out...
  • #456
  • Edited 4:24pm Jul 30, 2009 1:40pm | Edited 4:24pm
Quoting rtx
Hi Jeffreytp


Lots of you are trading E/U vs G/U, but who tried backtest that big long on E/U from dec 08 ???? did you realize that G/U didnt make such long spike ?

do you realize that since 5th Dec 08 till that highs in next days euro went long 1900 pips !!!!!!!!! and G/U was choppy ?

so lets say you had seen "opportunity" make sell vs long on 5th Dec, on 18th dec your drawdown would be 1900 pips ... what next ? this thread would be dead,
It's impossible to say what the judgement call would have been in Dec 08 but as you can see, the Spread was accelerating for quite some time before the spike in the EUR/USD so my guess is that if you were following the spreads (as you definately should be) then you would be positioned correctly to take advantage of the that huge move. It's obvious that if you played the wrong side of this long move that you would have lost your shirt. Isn't that true with any method or system of trading? How did other systems fare with these two pairs last Dec? If you were playing them with any system, you were foolish not to watch the spread. Even if you were just playing one of them, you would have been nuts to not watch the spread.

Can I say it again? Watch the spreads! For me, they put things in perspective.

This is a general thought and NOT directed towards you or anyone else but I'm getting a bit tired of people saying that this way of trading is doomed or "just wait...someday you'll take a big hit". WTF! What method doesn't take it's hits??? Trading is about doing something you enjoy and hopefully making money with it. Making money is certainly possible even though the vast majority of people don't. I've never believed you will make money by doing what everyone else does. Find a niche or find a different way to do something and you have a chance of being successful.

Just my 2 pips.
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  • #457
  • Jul 30, 2009 2:12pm Jul 30, 2009 2:12pm
How did you add that spreads window in NT?
  • #458
  • Jul 30, 2009 2:26pm Jul 30, 2009 2:26pm
Quoting Jm1941
Yep; took quite a hit on USDCHF/EURUSD yesterday. That's why I'm still demoing this.

Jeffery TP seems to have it figured out...

I opened a string of positions yesterday around 3:34am EST when the bear was hungry. Seems to be still hungry. Hasn't closed his mouth yet, but when he does, cha ching!

I entered a few today too.

Attached Image



This is my problem child:
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  • #459
  • Jul 30, 2009 2:54pm Jul 30, 2009 2:54pm
Quoting weekapaugh
How did you add that spreads window in NT?
That's a thinkorswim chart with the spreads study added to it.
  • #460
  • Jul 30, 2009 3:25pm Jul 30, 2009 3:25pm
Quoting jeffreytp
I opened a string of positions yesterday around 3:34am EST when the bear was hungry. Seems to be still hungry. Hasn't closed his mouth yet, but when he does, cha ching!

I entered a few today too.

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This is my problem child:
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Are you still looking at Eur/Aud vs Gbp/Jpy? looks interesting.
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