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Hedge and Correlation Strategy

  • #681
  • Sep 2, 2009 10:36am Sep 2, 2009 10:36am
Quoting jtmoore007
ok i can get that!! what i was saying is that there is no correlation between the price gap being above a certain number or below a certain number. those numbers don't mean anything to me. BUT if you read the spikes in the manner you just described then you would probably do pretty good.

now then, lets start looking at it that way!
We've been looking at it "that way" since the beginning of this thread .

What we've added is an indicator that plots numerically what we are seeing visually on the Daily FX chart, and that indicator has been derived from the Excel sheets posted earlier. If you combine looking at those Excel sheets with the indicator you will see what the numbers mean.

Hope that helps.
  • #682
  • Sep 2, 2009 10:45am Sep 2, 2009 10:45am
Quoting jtmoore007
here is what im talking about
http://www.forexfactory.com/showpost...&postcount=677

Dreamliner gave a good answer here.

The indicator just follows the spike... spike up---indicator up
spike down-- indicator down

If indicator is up (after the spike) and turning down (on the GBPUSD and EURUSD pairs) that means Sell GBPUSD and Buy EURUSD
If indicator is down (after a spike) and turning up (on the GBPUSD and EURUSD pairs) that means Buy GBPUSD and Sell EURUSD

(on each of the pairs, if you check the time of each turn... and check the price of each pair for that time.... then check the time when it reaches the opposite direction and the price of each pair.. you will find that the above is correct.

Bruce
  • #683
  • Sep 2, 2009 11:01am Sep 2, 2009 11:01am
Quoting brucech
http://www.forexfactory.com/showpost...&postcount=677

Dreamliner gave a good answer here.

The indicator just follows the spike... spike up---indicator up
spike down-- indicator down

If indicator is up (after the spike) and turning down (on the GBPUSD and EURUSD pairs) that means Sell GBPUSD and Buy EURUSD
If indicator is down (after a spike) and turning up (on the GBPUSD and EURUSD pairs) that means Buy GBPUSD and Sell EURUSD

(on each of the pairs, if you check the time of each turn... and check the price of each pair...

Not true
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Dream compare.png Size: 28 KB
Click to Enlarge Name: Dream Compare 2.png Size: 30 KB
  • #684
  • Sep 2, 2009 11:04am Sep 2, 2009 11:04am
Im with Jeffrey will be looking at it this way


Quoting jeffreytp
I think using the dailyFX for entry and FXCM Marketscope overlay for confirmation is the way to go with this.

With Dreamliner's comment in mind

Right! Simply sell the one that has spike UP, Talking about the individual pair that spikes not the price difference spike!!!!, and buy the other. Or if the spike is down, then buy the one that has spiked down and sell the other.

Example: if you look right now at EUR/USD and GPB/USD on Daily FX you will see that there was a spike, a wide gap, between these two currency pairs earlier today. The GBP/USD was on top and had spiked UP. The EUR/USD was on the bottom and had spiked down.

We entered by selling GBP/USD and buying EUR/USD. The gap is narrowing now, as expected.

A second example. Earlier GBP/CHF spike up while GBP/USD spiked down, making a gap. We entered short on GBP/CHF and long on GBP/USD. The gap has nearly closed now and we are in big profit (nearly 1% profit right now) and so will close the trade.

That's how it works. And it works consistently. I don't know when I started this thread, but I have not lost a trade since I started.
  • #685
  • Sep 2, 2009 11:30am Sep 2, 2009 11:30am
Quoting jtmoore007
Im with Jeffrey will be looking at it this way

With Dreamliner's comment in mind

Right! Simply sell the one that has spike UP, Talking about the individual pair that spikes not the price difference spike!!!!, and buy the other. Or if the spike is down, then buy the one that has spiked down and sell the other.
................
I understand what you are saying. And I think it is best to follow Dreamliner's comments.

Bruce
  • #686
  • Sep 2, 2009 12:04pm Sep 2, 2009 12:04pm
Just closed the EUR/USD, GBP/USD trade out at a nice profit.
  • #687
  • Sep 2, 2009 12:12pm Sep 2, 2009 12:12pm
Awsome,

thank's for all your effort here...

PC

Quoting Dreamliner
Just closed the EUR/USD, GBP/USD trade out at a nice profit.
Less is more...
  • #688
  • Sep 2, 2009 1:12pm Sep 2, 2009 1:12pm
Quoting Dreamliner
Just closed the EUR/USD, GBP/USD trade out at a nice profit.

can you look at history and tell me exact get in and get out times.

im still in trade and at a tiny profit not enough to worry with. 7 pips between the 2

NO CROSS in daily fx either
  • #689
  • Sep 2, 2009 1:15pm Sep 2, 2009 1:15pm
Quoting jtmoore007
can you look at history and tell me exact get in and get out times.

im still in trade and at a tiny profit not enough to worry with. 7 pips between the 2

NO CROSS in daily fx either
No. This system cannot look at history and tell much of anything, because the charts (and I'm not sure what word is right here) reformat, or realign themselves, so that as time goes by what once was a gap has filled in.

Guys, just demo this system. When you see a gap get in it. Allow the trade to go against you and average in, if you want to. When in profit, check the gap, check if it is narrowing, check if it looks like a good time to get out. If so, close.

That's how I learned to trade this system. Pretty soon you will recognize an acceptable gap and what it looks like, and you'll know you will make money.

When you've been profitable each day for a month, maybe then consider live trading it.
  • #690
  • Sep 2, 2009 1:18pm Sep 2, 2009 1:18pm
certainly make money with this, only down side i can see is your account would have to be well funded
Attached Image (click to enlarge)
Click to Enlarge Name: eur1.gif Size: 57 KB
Seek not to change the world; seek only to change your mind about the world
  • #691
  • Sep 2, 2009 1:23pm Sep 2, 2009 1:23pm
Quoting gez40
certainly make money with this, only down side i can see is your account would have to be well funded
I have four accounts, here are the amounts of them each, after trading this system since March:

1. Oanda: Balance is $394.00

2. Oanda: Balance is $119.00

3. FXCM: Balance is $262.00

4. IBFX: Balance is $598.00

I started with just one account of $500.00 and as it grew I broke off into other accounts so that I could trade more currencies.

I would have no problem starting with $10.00 (ten dollars) in Oanda, as you can trade with units there, rather than minilots.

It really doesn't matter what you start with, it matters that you are consistently winning and increasing your balance.
  • #692
  • Sep 2, 2009 1:25pm Sep 2, 2009 1:25pm
JusT for this trade will u tell me entry time and exit time. Much appreciated
  • #693
  • Sep 2, 2009 1:28pm Sep 2, 2009 1:28pm
Quoting jtmoore007
JusT for this trade will u tell me entry time and exit time. Much appreciated

Entry: the wider the gap the better, just buy the one bellow and sell the one on top.
Exit: either when they cross or you`re happy with your profits at that point.
Seek not to change the world; seek only to change your mind about the world
  • #694
  • Sep 2, 2009 1:31pm Sep 2, 2009 1:31pm
hold on to long and you could lose some gains, halved already since my earlier post...
Attached Image (click to enlarge)
Click to Enlarge Name: eur12.gif Size: 59 KB
Seek not to change the world; seek only to change your mind about the world
  • #695
  • Sep 2, 2009 1:36pm Sep 2, 2009 1:36pm
Quoting jtmoore007
JusT for this trade will u tell me entry time and exit time. Much appreciated
Sure:

Sold GBP/USD September 2, 08:09 EST. Price 1.6232
Bought EUR/USD September 2, 08:09 EST. Price 1.4220

Close trade GBP/USD September 2, 13:03 EST. Price 1.6279 (-53)
Close trade EUR/USD September 2, 13:03 EST. Price 1.4284 (+64)

I used 1,000 units (.1 mini-lot) on both of the currency pairs for a total profit of $1.73.

This was not much of a profit, but with this pair sometimes you don't get much. But on an account size of $119.00 that is a profit of over 1% and it was a very short trade, just a couple of hours.

1% per day in Forex will make you a millioniare.
  • #696
  • Sep 2, 2009 1:38pm Sep 2, 2009 1:38pm
Quoting Dreamliner
Sure:

Sold GBP/USD September 2, 08:09 EST. Price 1.6232
Bought EUR/USD September 2, 08:09 EST. Price 1.4220

Close trade GBP/USD September 2, 13:03 EST. Price 1.6279 (-53)
Close trade EUR/USD September 2, 13:03 EST. Price 1.4284 (+64)

I used 1,000 units (.1 mini-lot) on both of the currency pairs for a total profit of $1.73.

This was not much of a profit, but with this pair sometimes you don't get much. But on an account size of $119.00 that is a profit of over 1% and it was a very short trade, just a couple of hours.

1% per day in Forex...
Dreamliner,

Do you trade other pairs or just these two?

Gez
Seek not to change the world; seek only to change your mind about the world
  • #697
  • Sep 2, 2009 1:42pm Sep 2, 2009 1:42pm
Quoting gez40
Dreamliner,

Do you trade other pairs or just these two?

Gez
I trade these two plus:

GBP/CHF and GBP/USD
USD/JPY and GBP/JPY
USD/JPY and EUR/JPY
EUR/CHF and USD/JPY

I'm open to other pairs, too. I just look at the mataf correlation tables that have a high (80-99%) correlation rate on the daily timeframe.

I used to trade non-correlated currencies but that was way too risky. Even though I never lost on them, the potential for huge losses was there. So now I just trade these little handful of highly correlated currency pairs, quietly earning 1-10% per day.
  • #698
  • Sep 2, 2009 1:47pm Sep 2, 2009 1:47pm
Quoting Dreamliner
I trade these two plus:

GBP/CHF and GBP/USD
USD/JPY and GBP/JPY
USD/JPY and EUR/JPY
EUR/CHF and USD/JPY

I'm open to other pairs, too. I just look at the mataf correlation tables that have a high (80-99%) correlation rate on the daily timeframe.

I used to trade non-correlated currencies but that was way too risky. Even though I never lost on them, the potential for huge losses was there. So now I just trade these little handful of highly correlated currency pairs, quietly earning 1-10% per day.
Think i`ll spend a bit more time on this than i have been, 1-10% per day is nice, that will soon add up.

Gez
Seek not to change the world; seek only to change your mind about the world
  • #699
  • Sep 2, 2009 1:50pm Sep 2, 2009 1:50pm
Quoting gez40
Think i`ll spend a bit more time on this than i have been, 1-10% per day is nice, that will soon add up.

Gez
Yes, today I think I've made 2% because of that very nice GBP/CHF GBP/USD trade. Some days more, some less.
  • #700
  • Sep 2, 2009 1:55pm Sep 2, 2009 1:55pm
Quoting jtmoore007
can you look at history and tell me exact get in and get out times.

im still in trade and at a tiny profit not enough to worry with. 7 pips between the 2

NO CROSS in daily fx either
See here:
Attached Image


If you are short GU and long EU it is time to get out or you are at risk of drawdown until it flipps again.
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