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Hedge and Correlation Strategy

  • #801
  • Sep 3, 2009 2:42pm Sep 3, 2009 2:42pm
Dreamliner,

I continue to trade your system.It has been so far, a great pip maker. All my trades except 2 , ( total of 18 trades) have been positive. The other two trades I have not closed and I am almost sure will go into positive.

Regarding when to take profit I have been getting out when positive is double of the loss. In other words if Losing currency pair is showing a loss of $5.00 and the other pair is showing profit of $10.00 I exit.

Thanks again for this wonderful system
  • #802
  • Sep 3, 2009 2:47pm Sep 3, 2009 2:47pm
Quoting T.E.Lawrence
Added second time to this trade:

Attachment

Current open positions:

short GBP/USD x3
long GBP/YPY x3
I've just closed this trade: +87 pips. The gap is still open and I could have taken bigger profit, but I needed to free used margin in my account - there's another trade coming, this time with different strategy.
  • #803
  • Sep 3, 2009 3:09pm Sep 3, 2009 3:09pm
Dear Dreamliner,

Lenoxer here. I posted the thread to Aleksey's hybrids not for his system's sake, which is undescribed and, hence, uselss, but rather to see how he normalized lot sizes across the entire range of majors and crosses according to their respective $ pip values and volatilities. His formula, on post #6 there, seems robust:

Originally Posted by smjones http://cdn.forexfactory.com/images/buttons/viewpost.gif
This is interesting. So, your position size is normalized to the EU. Do you do this on a dynamic basis, based on EU volatility, or do you make the determination on a periodic basis?

Also, what is your measure of volatility?

Thanks
I use a simple way to normalize.
During last four months the course of EURUSD was limited to 1.3400 from below and 1.5000 from above, so its change was 16 figures.
For EURCHF it was 6 figures.
Also we have to take into account that the price of one pips of EURUSD is to one pips of EURCHF as 1 is to 0.87 (for the equal size of a position).
As a result the size of a position of EURCHF has to be taken as 100K*16/(6*0.87)=300K (approximately).


And for example:

Attached Images
http://cdn.forexfactory.com/attachme...1&d=1195972319
  • #804
  • Sep 3, 2009 3:14pm Sep 3, 2009 3:14pm
Hi,

I am looking for explanations please. I read the thread but I am still confused about that. I plotted three pairs (EURUSD=green - AUDUSD=blue - GBPUSD=red) wich are highly correlated to one another (r>0.8). When I use a normal 30min chart, I would trade EURUSD long and AUDUSD short (also EURUSD long and GBPUSD short) wich I just did.

http://i30.tinypic.com/j7qpnd.gif

However, when the chart is zoomed out, I am wondering if I should have traded the couple GBPUSD/EURUSD the other way around.

http://i31.tinypic.com/2yzif4l.gif

The situation remained the same for the couple AUDUSD/EURUSD. In this particular case, would it be a criteria for entering a trade?

Thanks

Chamane
  • #805
  • Sep 3, 2009 3:17pm Sep 3, 2009 3:17pm
Quoting T.E.Lawrence
Of course, +42.8 pips right now, but the gap isn't closed yet.

Take your profit and move on. Just because the gap closes does not mean you will have greater profit every time. It all depends on the direction the two take.
  • #806
  • Sep 3, 2009 3:20pm Sep 3, 2009 3:20pm
Quoting jtmoore007
just a thought
just got in

Attached Image
  • #807
  • Sep 3, 2009 3:27pm Sep 3, 2009 3:27pm
Quoting chamane
Hi,

I am looking for explanations please. I read the thread but I am still confused about that. I plotted three pairs (EURUSD=green - AUDUSD=blue - GBPUSD=red) wich are highly correlated to one another (r>0.8). When I use a normal 30min chart, I would trade EURUSD long and AUDUSD short (also EURUSD long and GBPUSD short) wich I just did.

http://i30.tinypic.com/j7qpnd.gif

However, when the chart is zoomed out, I am wondering if I should have traded the couple GBPUSD/EURUSD the other way around.

http://i31.tinypic.com/2yzif4l.gif...

You should stop using MT4 overlay b/c they are incorrect. I figured that out a few pages ago. Use FXCM Marketscope which is accurate and does not repaint.
  • #808
  • Sep 3, 2009 3:29pm Sep 3, 2009 3:29pm
Keep your eye out beginning at 7am EST on 9/4/09 and 8:30am EST you may run into wild spikes and see great profit opporunities as big news expected out on CAD and USD pairs.
  • #809
  • Sep 3, 2009 3:33pm Sep 3, 2009 3:33pm
Quoting jeffreytp
You should stop using MT4 overlay b/c they are incorrect. I figured that out a few pages ago. Use FXCM Marketscope which is accurate and does not repaint.
Guess I went too fast. Post #718. Thanks.

Chamane
  • #810
  • Sep 3, 2009 5:21pm Sep 3, 2009 5:21pm
Wow, with all these extra pairs given to us we literally are like kids in a candy store. Trade opportunities abound! Have you noticed? That's great because now once we exit we just jump back in with another pair!
  • #811
  • Sep 3, 2009 5:53pm Sep 3, 2009 5:53pm
we really could use the ea we are trying to get made!!! that way we could trade all of these pairs at the same time without trying to figure out when to close what. still have to worry about hedging and fifo if using swaps with the same pair. ( for us US guys )
  • #812
  • Sep 3, 2009 5:56pm Sep 3, 2009 5:56pm
Quoting thecambist
Ok like I promised yesterday here is a list of positive correlated pairs from mataf.
The correlation goes from around 60 % up to 100%.For example the trade we took yesterday Eur/usd-Eur/JPY was only 63.4% but was a beauty.Thats why i went so low at the %.

Here are the pairs:

GBP/USD-GBP/CHF
GBP/USD-GBP/JPY
GBP/USD-EUR/JPY
EUR/USD-GBP/USD
EUR/USD-EUR JPY
USD/JPY-EUR/JPY
USD/JPY-GBP/CHF
USD/JPY-GBP/JPY
USD/JPY-EUR/CHF
EUR/JPY-EUR/CHF
EUR/JPY-GBP/JPY
EUR/CHF-GBP/CHF
EUR/CHF-GBP/JPY
GBP/CHF-GBP/JPY

Hope that helps

Regards

Dreamliner - wouldn't be a bad idea to add this list to post 1 just a thought.

also if you haven't downloaded FXCM marketscope - do you self a favor!! much better than dailyfx!!
  • #813
  • Sep 3, 2009 6:01pm Sep 3, 2009 6:01pm
Quoting jtmoore007
Dreamliner - wouldn't be a bad idea to add this list to post 1 just a thought.

also if you haven't downloaded FXCM marketscope - do you self a favor!! much better than dailyfx!!
OK I added the pairs to the first post. And I hate to say this but I downloaded the marketscope earlier and really couldn't figure out how to overlay very well. It seemed like there were way too many options.

With Dailyfx I have 4 tabs with 4 currency pairs in each tab, and can get a good trade at any time.

I might look at marketscope again but it seemed difficult to me.
  • #814
  • Sep 3, 2009 6:08pm Sep 3, 2009 6:08pm
Quoting Dreamliner
OK I added the pairs to the first post. And I hate to say this but I downloaded the marketscope earlier and really couldn't figure out how to overlay very well. It seemed like there were way too many options.

With Dailyfx I have 4 tabs with 4 currency pairs in each tab, and can get a good trade at any time.

I might look at marketscope again but it seemed difficult to me.

yeah, takes a couple of min to get used to it. first u have to change to line graph and then uncheck high and low. then go to "something" and set overlay just as in dailyfx. i say "something" because im home now on wife's comp and it isn't on here. ill download it now

you can do it. put that little bit of computer skills that you have to work. lol
(im not much better!!!)
  • #815
  • Sep 3, 2009 6:11pm Sep 3, 2009 6:11pm
Quoting jtmoore007
yeah, takes a couple of min to get used to it. first u have to change to line graph and then uncheck high and low. then go to "something" and set overlay just as in dailyfx. i say "something" because im home now on wife's comp and it isn't on here. ill download it now

you can do it. put that little bit of computer skills that you have to work. lol
(im not much better!!!)
That's funny. My brain just doesn't work like a computer, but I'm trying to learn.

So I'm at the FXCM site and registering for a free account, and got registered, and do I want to "Download the FX Trading Station?" Is that it?
  • #816
  • Sep 3, 2009 6:18pm Sep 3, 2009 6:18pm
OK I have it downloaded now. Maybe somebody can put up step by step instructions for how to set it up the way we want it, with all 14 or 16 charts. And please be BASIC, like

1. Turn on your computer (button on top left)

2. ....

You get the idea

  • #817
  • Sep 3, 2009 6:22pm Sep 3, 2009 6:22pm
Quoting Dreamliner
OK I have it downloaded now. Maybe somebody can put up step by step instructions for how to set it up the way we want it, with all 14 or 16 charts. And please be BASIC, like

1. Turn on your computer (button on top left)

2. ....

You get the idea


doing it right now give me a sec
  • #818
  • Sep 3, 2009 6:27pm Sep 3, 2009 6:27pm
Here is the download link for the software:
http://www.fxcorporate.com/FXCM/FXTS2Install.EXE

Then go to this page to open demo account:
http://www.fxcm.co.uk/free-forex-accounts.jsp

click 1st link, hit ok ok ok whatever then finish. then "minus" everything. you should now see your desktop. click on new icon from fxcm then open demo account from link. - the one on the top right

enter all your info when done hit enter / register it will give user and password. copy and paste this into new fxcm trading station.......................... to be continued
  • #819
  • Sep 3, 2009 6:29pm Sep 3, 2009 6:29pm
Quoting jtmoore007
Here is the download link for the software:
http://www.fxcorporate.com/FXCM/FXTS2Install.EXE

Then go to this page to open demo account:
http://www.fxcm.co.uk/free-forex-accounts.jsp

click 1st link,...
Did all that, and now I have a chart open. I chose line chart but I have 3 lines and its very confusing. Waiting to hear more...
  • #820
  • Sep 3, 2009 6:35pm Sep 3, 2009 6:35pm
Quoting Dreamliner
Did all that, and now I have a chart open. I chose line chart but I have 3 lines and its very confusing. Waiting to hear more...
select time frame (I use 30 minutes - in my opinion best one for this strategy). next to that in a drop down box called "chart mode", unselect high line & low line
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