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Hedge and Correlation Strategy

  • #521
  • Aug 7, 2009 2:49pm Aug 7, 2009 2:49pm
Quoting ronaldosim
Thanks for giving us some direction (via VSA) and hope ....
It works fine but you will lose some due to mainly the banks consolidating their market positions. But then, this happens with whatever system you use, which is something that people dont seem to understand fully.
  • #522
  • Aug 7, 2009 4:55pm Aug 7, 2009 4:55pm
Quoting scooby-doo
It works fine but you will lose some due to mainly the banks consolidating their market positions. But then, this happens with whatever system you use, which is something that people dont seem to understand fully.
That's a pretty broad statement Scooby-do. There are many who do indeed understand it, and possibly some don't.
  • #523
  • Aug 8, 2009 2:15am Aug 8, 2009 2:15am
Quoting Dreamliner
That's a pretty broad statement Scooby-do. There are many who do indeed understand it, and possibly some don't.
Well, from reading many threads on FF, i would suggest that the majority dont understand it. Its probably down to people who dont have SL in place before placing trades. I get (Because of my day job) many people asking me why did this currency drop x amount of points when there were no pending economic indicators for it.

The best example i can give is the BOJ who on a daily basis intervene with their currency pairs, mainly USDJPY, if they are oversold prior to the asian session and overbought towards the end of the asian session. Its virtually and indicator to print money!!!!.
  • #524
  • Aug 10, 2009 12:05pm Aug 10, 2009 12:05pm
hi
i think i have found two pairs to hedge and i have traded and monitored them for last few days and from today i am trading them in my real account with mini contracts,,,
made 13 pips today by this method and have another open positions..............
however as said earlier in this thread it looks too simple to believe and caution is required...........
  • #525
  • Aug 10, 2009 12:18pm Aug 10, 2009 12:18pm
Quoting shahram261
hi
i think i have found two pairs to hedge and i have traded and monitored them for last few days and from today i am trading them in my real account with mini contracts,,,
made 13 pips today by this method and have another open positions..............
however as said earlier in this thread it looks too simple to believe and caution is required...........
Go ahead and share your method and pairs please.
  • #526
  • Aug 12, 2009 9:18am Aug 12, 2009 9:18am
The charts on FXCM's UK platform has overlay feature and does not repaint. Looking at the chart without repainting is a whole new world.
  • #527
  • Aug 12, 2009 9:34am Aug 12, 2009 9:34am
Quoting jeffreytp
The charts on FXCM's UK platform has overlay feature and does not repaint. Looking at the chart without repainting is a whole new world.
What trading platform are you talking about? Not their MT4 I take it. So which one are you referring to?
  • #528
  • Aug 12, 2009 10:57am Aug 12, 2009 10:57am
Never mind, I found and installed it. So far looks identical to the daily fx charts.
  • #529
  • Aug 13, 2009 5:35am Aug 13, 2009 5:35am
Quoting Dreamliner
Never mind, I found and installed it. So far looks identical to the daily fx charts.

Slide both charts left and right, dailyfx adjusts and FXCM does not.
  • #530
  • Aug 13, 2009 8:37am Aug 13, 2009 8:37am
Quoting jeffreytp
Slide both charts left and right, dailyfx adjusts and FXCM does not.
hello jeffrey:coul,td you give us a link,thanks
  • #531
  • Aug 20, 2009 3:14am Aug 20, 2009 3:14am
I'm still trading this system from time to time. I trade only fiber/cable, and don't use any charting with overlays - only mt4; I visually check both charts to see whether pairs are on the same level or not. Also I use this strategy often when one pair accelerates and other lags behing.
Often I don't wait for the gap to close, but take 20 - 30 pips whenever I can. I prefer fast trades with 5min tf than long trades on 30min or 1h. Also if there is 50 pips loss I get out of the trade and wait for a better entry. It takes some practice and experience to enter proper trade, and I don't trade every gap.

Also check every day mataf.net for currency correlation. If correlation on 1h is high it means that, though there is a gap, the euro and cable are moving same ways. So if there is a gap this means that the gap will be intact for some time, and currencies are going to 'drift' which is very dangerous (the gap will be closed ofter long time with loss). In that case don't enter a trade.

Remember - you want temporary decorrelated state (gap) of high correlated currencies. So best setup is when there is low correlation on 1h but high correlation on daily bases. It means that in short term, because currencies are temporary decorrelated, they're moving against each other (closing or widening a gap).

P.S.

I was trying to incorporate pivots and S/R line but it doesn't work well and only stir the mud in the lake.
  • #532
  • Aug 20, 2009 5:00am Aug 20, 2009 5:00am
I'm still trading this too, exactly as posted in post number 1. I made 38% on my account last week, and so far this week 20%.

I just wanted to warn other people not to trade it without understanding the risks, but this is my main system and I'm sticking with it. I still have not had a losing trade.
  • #533
  • Aug 20, 2009 5:18am Aug 20, 2009 5:18am
DL,

Are you taking a 1:1 position size on the pairs?
  • #534
  • Aug 20, 2009 5:22am Aug 20, 2009 5:22am
Quoting lcfxtrader
DL,

Are you taking a 1:1 position size on the pairs?
If you mean lot size, yes I take exact same size on both pairs on every trade.
  • #535
  • Aug 20, 2009 8:04am Aug 20, 2009 8:04am
Quoting jeffreytp
The charts on FXCM's UK platform has overlay feature and does not repaint. Looking at the chart without repainting is a whole new world.
Thanks a lot for the link. We've all been waiting for this.
  • #536
  • Aug 20, 2009 8:32am Aug 20, 2009 8:32am
FXCM platform rocks! I've been using mostly oanda's charting and it sucks big time!
  • #537
  • Aug 20, 2009 8:39am Aug 20, 2009 8:39am
Quoting Dreamliner
Never mind, I found and installed it. So far looks identical to the daily fx charts.
They look a little bit different:

Attached Image (click to enlarge)
Click to Enlarge Name: dailyfx.jpg Size: 95 KB


Attached Image (click to enlarge)
Click to Enlarge Name: fxcm.jpg Size: 64 KB
  • #538
  • Aug 20, 2009 9:12am Aug 20, 2009 9:12am
Quoting Dreamliner
I still have not had a losing trade.
Really? How's that?
  • #539
  • Aug 20, 2009 9:20am Aug 20, 2009 9:20am
Picked up a nice +50 pip profit this morning on the GBP/USD vs. EUR/USD & GBP/JPY vs. EUR/JPY.
  • #540
  • Aug 20, 2009 12:12pm Aug 20, 2009 12:12pm
Quoting Dreamliner
I'm still trading this too, exactly as posted in post number 1. I made 38% on my account last week, and so far this week 20%.

I just wanted to warn other people not to trade it without understanding the risks, but this is my main system and I'm sticking with it. I still have not had a losing trade.
Me too, same as day 1. I've had a trade or two over the past 3 months that I've had to exit with a loss, but that was when I was intentionally being too aggressive with the system. Since then I've tamed down a bit, and not gone in with too much too soon, typically making %1-%7 of my account value per trade on 2 or 3 trades per week (only using Eur/Gbp).

Based on his numbers I'd guess Dreamliner is trading more aggressively than I am. And if it works, then more power to you! Just out of curiosity, what all pairs are you watching now? And how much of a spread do you wait for before making your first entry? At first I was jumping in as soon as I saw ANY spread, and it worked pretty well. But, like I said, I've eased up a bit and now only enter when I see a "decent" spread.

This is by far the most consistent method I've day traded in the past 7 years. I see no reason to complicate things as of yet.
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