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Hedge and Correlation Strategy

  • #561
  • Aug 27, 2009 10:21am Aug 27, 2009 10:21am
[quote=T.E.Lawrence;2997069]So you wait for a profit and don't close a trade, even when pairs crossed each other?quote]
CORRECT
  • #562
  • Aug 27, 2009 4:18pm Aug 27, 2009 4:18pm
Dreamliner, can you please let everybody know what pairs you've used with this system? I know you've mentioned some, but I'd like to know which ones you watch regularly.
  • #563
  • Edited 1:54am Aug 28, 2009 1:22am | Edited 1:54am
What a setup! Nice place to enter a trade, isnt it?

Attached Image (click to enlarge)
Click to Enlarge Name: chart3.jpg Size: 121 KB


I've just added another short(euro) & long(cable) to my existing trade. It just looks so beautiful.

And, what do you think about adding to already existing trade?
  • #564
  • Aug 28, 2009 6:35am Aug 28, 2009 6:35am
Ok, I closed all my trades for 100 pips profit (2 days of trading). Nice.
  • #565
  • Aug 28, 2009 6:46am Aug 28, 2009 6:46am
Just to get it right.

Lets say You wanna buy GBP/CHF and sell EUR/GBP.

So You would buy 100.000 GBP and sell 100.000 EUR,correct??

Thx
  • #566
  • Aug 28, 2009 7:06am Aug 28, 2009 7:06am
Quoting T.E.Lawrence
What a setup! Nice place to enter a trade, isnt it?

Attachment

I've just added another short(euro) & long(cable) to my existing trade. It just looks so beautiful.

And, what do you think about adding to already existing trade?
I saw this one yesterday and immediately jumped on, and jumped on big. The monster's mouth was wide open, and was going to swallow a bunch of pips. This type of de-correlation is the perfect set up and I threw everything at it, as it was practically a risk free trade.

This morning I closed out for nearly 100 pips of large profit. I am sure I could have hung on for more, but the weekend is approaching and I just wanted to be in cash over the weekend.

So when you see something like this, it is a ticket to print money. I hope you got in.
  • #567
  • Aug 28, 2009 7:37am Aug 28, 2009 7:37am
Quoting girdle66
Dreamliner, can you please let everybody know what pairs you've used with this system? I know you've mentioned some, but I'd like to know which ones you watch regularly.
Eur/Usd and Gbp/Usd
Usd/Jpy and Gbp/Jpy
Gbp/Usd and Gbp/Chf
Usd/Jpy and Eur/Jpy
Usd/Jpy and Eur/Chf

These are the main ones, though I've traded others that are negatively correlated. I don't like that as much now, though, as it is too risky. I mainly trade the above ones. I've just completed this week's trading with a 68% increase on a live account (mainly because of the huge trade that Eur/Usd and Gbp/Usd gave us yesterday and today).
  • #568
  • Aug 28, 2009 7:51am Aug 28, 2009 7:51am
Quoting Dreamliner
Eur/Usd and Gbp/Usd
Usd/Jpy and Gbp/Jpy
Gbp/Usd and Gbp/Chf
Usd/Jpy and Eur/Jpy
Usd/Jpy and Eur/Chf

These are the main ones, though I've traded others that are negatively correlated. I don't like that as much now, though, as it is too risky. I mainly trade the above ones. I've just completed this week's trading with a 68% increase on a live account (mainly because of the huge trade that Eur/Usd and Gbp/Usd gave us yesterday and today).
Thanks for the list. I'm glad to hear you made some money on the recent Euro&Cable splits. I've had a rough stretch. They split last thursday and continued splitting until yesterday, that's the longest run I'd seen yet - serious DD. How did you avoid it?
  • #569
  • Edited 7:55am Aug 28, 2009 7:54am | Edited 7:55am
Quoting girdle66
Thanks for the list. I'm glad to hear you made some money on the recent Euro&Cable splits. I've had a rough stretch. They split last thursday and continued splitting until yesterday, that's the longest run I'd seen yet - serious DD. How did you avoid it?
I average in, that's how I avoid huge drawdowns. I take 1/5th of the position size I want to enter the trade, then I enter that when it looks good. If it moves against I average in a total of 5 times.

Except yesterday of course, that was the best looking entry I'd seen in a long time so I threw the whole farm at it .
  • #570
  • Aug 28, 2009 8:15am Aug 28, 2009 8:15am
Quoting Dreamliner
I average in, that's how I avoid huge drawdowns. I take 1/5th of the position size I want to enter the trade, then I enter that when it looks good. If it moves against I average in a total of 5 times.

Except yesterday of course, that was the best looking entry I'd seen in a long time so I threw the whole farm at it .
I've taken a very similiar approach, but I was completely averaged in by Monday of this week - Leaving a full four days of tears and drawdown! When did you start phasing in to Euro/Cable?
  • #571
  • Aug 28, 2009 8:19am Aug 28, 2009 8:19am
Quoting girdle66
I've taken a very similiar approach, but I was completely averaged in by Monday of this week - Leaving a full four days of tears and drawdown! When did you start phasing in to Euro/Cable?
I entered my first on the 26th, and then I threw the farm at it yesterday. The reason I hadn't entered until the 26th is because I was in a lot of the other pairs and didn't have an available account to trade.

Great to not have a losing trade yet, right?
  • #572
  • Aug 28, 2009 8:47am Aug 28, 2009 8:47am
Quoting Dreamliner
I entered my first on the 26th, and then I threw the farm at it yesterday. The reason I hadn't entered until the 26th is because I was in a lot of the other pairs and didn't have an available account to trade.

Great to not have a losing trade yet, right?
Nah, I've had some losers. The trade I'm currently in (since last Thursday) will be a big loss. I'm holding on for the lines to cross again, although once they do I'm sure I'll still be in the red. Prior to my current trades I had only lost once or twice, and they were very small.

I'm surprised to hear that you're still batting 1000. My problem is that I always enter too early after a split. Sometimes that can be very profitable, but other times... it leaves you high and dry as the split widens.
  • #573
  • Aug 28, 2009 8:52am Aug 28, 2009 8:52am
Quoting girdle66
Nah, I've had some losers. The trade I'm currently in (since last Thursday) will be a big loss. I'm holding on for the lines to cross again, although once they do I'm sure I'll still be in the red. Prior to my current trades I had only lost once or twice, and they were very small.

I'm surprised to hear that you're still batting 1000. My problem is that I always enter too early after a split. Sometimes that can be very profitable, but other times... it leaves you high and dry as the split widens.
Why are you closing at a loss? Why not hold on until a profit? To each his own I guess, but I don't close until in profit. It's up to you.

It takes experience to know how much of a gap is a good entry. After awhile you can just spot it by eyeballing it. Like yesterday, that was the biggest split I have ever seen, it happened within an hour, and there was just no way to lose on that one.
  • #574
  • Aug 28, 2009 8:53am Aug 28, 2009 8:53am
T.E. Lawrence, are you still doing the 1 minute scalping with this system? If so, how is it going?
  • #575
  • Aug 28, 2009 9:43am Aug 28, 2009 9:43am
Quoting Dreamliner
Why are you closing at a loss? Why not hold on until a profit? To each his own I guess, but I don't close until in profit. It's up to you.

It takes experience to know how much of a gap is a good entry. After awhile you can just spot it by eyeballing it. Like yesterday, that was the biggest split I have ever seen, it happened within an hour, and there was just no way to lose on that one.
I've tried systems before where I refuse to close at a loss. They never end well. I prefer to have a specific close event in mind, with this system, when the lines cross. If I'm not profitable when they cross, then I take a loss. But, like you said, to each his own.

I've been eyeballing entries pretty well, up until last thursday. I had a rule with EuroCable to phase in another entry every 30-50 pips as the gap continued to expand. Perhaps I need to increase that to 60-80 pips, or even 70-100? I'd be in much better shape right now had I done that.
  • #576
  • Aug 28, 2009 9:53am Aug 28, 2009 9:53am
Quoting girdle66
I've tried systems before where I refuse to close at a loss....
Ah yes, I'd up the gap link and phase in every 80-100. Your profits will be less, but so will your drawdown.
  • #577
  • Aug 28, 2009 10:15am Aug 28, 2009 10:15am
Hi
Which charts do you recommend to use for this system. I have been using over lay chart indicator but I am not very happy with it
  • #578
  • Aug 28, 2009 10:21am Aug 28, 2009 10:21am
Quoting harar
Hi
Which charts do you recommend to use for this system. I have been using over lay chart indicator but I am not very happy with it
There have been several recommended, but I use the DailyFX charts. They may change their shape in the past, but in the present time you can see exactly when to enter. That's why I use them.
  • #579
  • Aug 28, 2009 10:28am Aug 28, 2009 10:28am
By the way, did you notice after our very healthy profit that the gap opened back up on Eur/Usd Gbp/Usd? I got back in again. Probably will be in over the weekend, but these trades are too hard to pass up.
  • #580
  • Aug 28, 2009 10:31am Aug 28, 2009 10:31am
Quoting Dreamliner
There have been several recommended, but I use the DailyFX charts. They may change their shape in the past, but in the present time you can see exactly when to enter. That's why I use them.
Thanks Dreamliner. I will try them next week
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