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Hedge and Correlation Strategy

  • #861
  • Sep 3, 2009 7:11pm Sep 3, 2009 7:11pm
Quoting jeffreytp
got that right. bonus money hit my account today.
good deal!! Gonna start skype chat in morn. But big news early in the morn from US so let's all b aware of that!!!!!
  • #862
  • Sep 3, 2009 7:20pm Sep 3, 2009 7:20pm
Quoting 2+2=4ex
This is a simple and relatively safe system, which is what makes it an overall attractive strategy, BUT it isn't the most profitable one if you know really how to trade forex. The reason is because of the time involved. A good trader who knows how to read s/r, pivots, trend lines & channels, and manage money can make more in a day trading straight up than waiting for correlated pairs to meet. Sure the straight up trader will lose some trades, but in this strategy one of your pairs usually ends up negative also.

Now with all that said,...
Great wisdom here, and thank you. I agree that it is not the most profitable, and that people trading actively can make much more. I'm just not one of them. If you are, teach me!
  • #863
  • Sep 3, 2009 7:34pm Sep 3, 2009 7:34pm
Quoting 2+2=4ex
This is a simple and relatively safe system, which is what makes it an overall attractive strategy, BUT it isn't the most profitable one if you know really how to trade forex. The reason is because of the time involved. A good trader who knows how to read s/r, pivots, trend lines & channels, and manage money can make more in a day trading straight up than waiting for correlated pairs to meet. Sure the straight up trader will lose some trades, but in this strategy one of your pairs usually ends up negative also.

Now with all that said,...
2+2,

This is a great post. Thanks for the inisghts.

rptrader
  • #864
  • Sep 3, 2009 7:39pm Sep 3, 2009 7:39pm
dear all,

i have read most posts in this thread, and tried "overlaychart" on my mt4 platform. there is a repainting problem. that means there is no single standard for "one currency higher than another one".

i checked the code of "overlaychart". let me show how it put two currencies into one chart:

1) decide how many bars are shown in current chart.
2) find out the highest point and lowest point for currency #1, then decide a "middle line".
3) find out the highest, lowest, middle for currency #2.
4) find out the ratio of (high1-low1) and (high2-low2).
5) shrink currency #1 or currency #2 with the ratio, so the middle lines meet each other, and high points meet each other, low points meet each other.

now we know the chart will be repainted even if ONE new bar is generated (and an old bar left the chart).


when you opened an position, the gbp may be higher than eur (and there is a good gap between them). but after one bar or a few bars, when the indicator repaint the picture, you may find out that gbp was LOWER than eur at your entry point!

i hope this is correct and will help. if not please let me know.
  • #865
  • Sep 3, 2009 7:41pm Sep 3, 2009 7:41pm
We don't use MT4, we use Daily FX or FXCM marketwatch.

Quoting shinetrip
dear all,

i have read most posts in this thread, and tried "overlaychart" on my mt4 platform....
  • #866
  • Sep 3, 2009 7:52pm Sep 3, 2009 7:52pm
Quoting shinetrip
dear all,

i have read most posts in this thread, and tried "overlaychart" on my mt4 platform. there is a repainting problem. that means there is no single standard for "one currency higher than another one".
Good point, and it is something that needs to be considered when trading this strategy. However, the overlaid chart is to be used as a general measure of when to enter trade and when to exit. That is why you want to find highly correlated pairs and enter when there is a large gap. The larger the gap and higher the correlation, the less likely it is that the 'repainting problem' will prevent you from a decent profit.

This is also why I'm thinking the 15 minute timeframe might be better than the 30 minute timeframe because it has less time to repaint.

You might also want to forget about mt4 overlay...it sucks. The one suggested in this thread (FXCM Marketscope) is the best one I've seen so far with overlaying charts.
  • #867
  • Sep 3, 2009 8:00pm Sep 3, 2009 8:00pm
Just sent this to programmer. look over and see if there is anything you guys would like to see added. waiting to hear back from him so your contributions need to be made asap so i can get to him asap

Will not b full automated. User will turn on at appropriate time and ea will manage trade

what we r doing Is opening 1 long position and 1 short position at same time. When the combination of the two trades is in profit we close. Can u make an ea that can look at the trade it opened between two pairs and if p/l of pair 1 + p/l of pair 2 = "X" profit. It closes these 2 trades ONLY.

We would have several of these "sets" of trades so it couldn't look at account balance to see if it was certain p/l because some "sets" of trades may b in drawdown but one "set" may b in profit.

Understand what I'm saying?

Inputs: buy symbol, lot size for buy. sell symbol, lot size for sell. profit target for this trade

The ea would only close these two trades once IN X profit and no other pair

one problem. Sometimes we use the same symbol on two or three different trades so it would need to know that this eu trade goes with gj and that eu goes with gu fir example. I understand that hedging wouldn't b allowed and ibfx doesn't enforce FIFO.

Do you get what I'm looking for

if so when can u get to it and how much is it gonna cost me

gonna run these rules by the other guys but this is it in a nutshell Any changes I'll let u know asap

thanks a million. As always -much appreciated
  • #868
  • Sep 3, 2009 10:41pm Sep 3, 2009 10:41pm
While I trade with this strategy, with the same rules as posted in the 1st post of this thread, I see a lot of discussion going on - sorry for being such a lazy person and not reading the whole stuff, but - have you found anything worth added to the rules in the 1st post?
  • #869
  • Sep 4, 2009 12:44am Sep 4, 2009 12:44am
Quoting T.E.Lawrence
While I trade with this strategy, with the same rules as posted in the 1st post of this thread, I see a lot of discussion going on - sorry for being such a lazy person and not reading the whole stuff, but - have you found anything worth added to the rules in the 1st post?

Nothing new T.E....we just added some pairs.List is at page one
  • #870
  • Sep 4, 2009 12:45am Sep 4, 2009 12:45am
Look at EUR/CHF-GBP/CHF
  • #871
  • Sep 4, 2009 1:05am Sep 4, 2009 1:05am
What do you think about opening trades in friday and leaving them opened over the weekend?
  • #872
  • Sep 4, 2009 1:09am Sep 4, 2009 1:09am
Quoting T.E.Lawrence
What do you think about opening trades in friday and leaving them opened over the weekend?
Bit risky but I think i keep my 3 open if not in profit until tonight.

If i would be in profit i would close them.
  • #873
  • Sep 4, 2009 1:36am Sep 4, 2009 1:36am
Guys please see post 867!!

Ive had several takers on the sype chat. Will start getting everyone together a little after US open. News should be settling down by then

( and wife has flat so must get tire fixed as soon as store opens - real reason LOL )

see you guys in few hours
  • #874
  • Sep 4, 2009 2:43am Sep 4, 2009 2:43am
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
I haven't done my own research into this, but what pairs, in order, from the list below work the best?

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


Thanks!
Probability Professor
  • #875
  • Sep 4, 2009 2:50am Sep 4, 2009 2:50am
Quoting jtmoore007
my screen im only watching 4
What charting software / internet site are you using?
Probability Professor
  • #876
  • Sep 4, 2009 3:39am Sep 4, 2009 3:39am
Quoting Galation
I haven't done my own research into this, but what pairs, in order, from the list below work the best?

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


Thanks!
That list should be updated regurlarly. Correlation changes over time and we want to make sure we get the highest values when we trade. The all time best correlation is probably EURUSD/USDCHF but the correlation is negative. That's why I wanted to know if it was possible to reverse a chart whith Marketscope as it is possible with MT4 so we can apply the trading rules to it.

Chamane
  • #877
  • Sep 4, 2009 3:40am Sep 4, 2009 3:40am
Quoting Galation
What charting software / internet site are you using?
We use marketscope from fxcm uk
  • #878
  • Sep 4, 2009 3:43am Sep 4, 2009 3:43am
for correlations check this site:
http://www.mataf.net/en/tools/correlation-table
  • #879
  • Sep 4, 2009 4:41am Sep 4, 2009 4:41am
IF live WATCH news this morn
  • #880
  • Sep 4, 2009 4:48am Sep 4, 2009 4:48am
Quoting Galation
What charting software / internet site are you using?

Start on page 55 post 818 and follow my posts. I spell it out with pics and everything.
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