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Hedge and Correlation Strategy

  • #1,121
  • Sep 9, 2009 1:10pm Sep 9, 2009 1:10pm
Quoting YM Trader
My FXCM Trading Station is down because of a demo server problem that they are aware of and trying to fix. I have to say that the FXCM platform is pretty sweet. Makes setting up and finding these pairs very easy. So easy even Dreamliner can do it, LOL! Just kidding.
You must have seen me in my latest commercial, where me and the guys were learning bowling. It was really fun. What did you think of my long hair and beard?
  • #1,122
  • Sep 9, 2009 1:37pm Sep 9, 2009 1:37pm
Quoting SkyzerFX
On 3 pairs for less than 4 hours run into 128 pips profit..
On very small lot though of course since I'm still testing this,
but it's on live account!

Only need better charts..
What pairs were you trading?

Thanks.
  • #1,123
  • Sep 9, 2009 2:00pm Sep 9, 2009 2:00pm
Quoting chamane
What pairs were you trading?

Thanks.
Actually the best approach is to switch them from time to
time

Was using those
----
EURJPY-GBPJPY

EURUSD-AUDJPY

CHFJPY-EURUSD
----
Now trading some others.. EURCHF/EURJPY crazy spread right now
but on daily basis corelation over 70% just enter that will see how it plays out
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  • #1,124
  • Sep 9, 2009 5:19pm Sep 9, 2009 5:19pm
ok there seems to have some conflicting charts between daily fx and marketscope. if you would look at eurjpy and eurusd on the two charts i mentioned they look very different. thats how i got in trouble this morning with gbpusd/eurjpy and i was looking at marketscope only but didnt compare it to dailyfx. now my drawdown was huge but luckily i closed it with just -36 pips. i was almost up to -100 pips. so i think we need to compare both charts before we take trades. this was first lose since ive been trading this method. but i know next time i will be carefull. will earn back plus more.

another advise i can give you guys is that demo trading this method is not really good as you cant experience the emotions that you feel with live acct. yes demo trading can be good to experiment with this method but you cant feel the same emotion as live trading. now if i would of closed my dd this morning because i was feeling emotionally drained, i would of lost -100 pips. but i had to control my emotions to just let it go. yes i know it could of gotten bigger dd but i knew the gaps would of close or come close to it. so just a warning about demo trading is that its not the same. my 2 cents
  • #1,125
  • Sep 9, 2009 6:05pm Sep 9, 2009 6:05pm
Dreamliner said he has never lost a trade. The secret is probably to be patient. Wait for a gap to become wide enough before entering and wait for prices to gather even if there is a drawdown. If the correlation is right, there is good chance to get some positive pips sooner or later. That conflict between chart bugs me a little. There must be a way to confirm the real situation.
  • #1,126
  • Sep 9, 2009 6:12pm Sep 9, 2009 6:12pm
Quoting chamane
Dreamliner said he has never lost a trade. The secret is probably to be patient. Wait for a gap to become wide enough before entering and wait for prices to gather even if there is a drawdown. If the correlation is right, there is good chance to get some positive pips sooner or later. That conflict between chart bugs me a little. There must be a way to confirm the real situation.

yes thats what im talkiing about is the two platform, dailyfx and marketscope. they can have two different look so which ones to go by? did you compare the pairs i mentioned chamane? look at them its totally different. now there is a trade brewing between gbpusd/usdjpy. now it looks that same on both platform so should we trust it. now the correlation between those two is -78.7 but if you look at eurusd its -80.5 so its better to trade eurusd/usdjpy. it think dreamliner had a better trades when it was positive correlation. what do you guys think/
  • #1,127
  • Edited 6:51pm Sep 9, 2009 6:41pm | Edited 6:51pm
Quoting treadline
they can have two different look so which ones to go by? did you compare the pairs i mentioned chamane?
All I can tell you, unless you already know, you have to look and compare

all possible time frames H1, H4, D1, or even more, if you wish.. That will

give you the full picture.. Looking only H1 chart TF will tell you nothing!

It's like "$1.44/EURO" is that high or low? Well depends how you look at it..

You need to start from H1 then draw to H4 D1 and so on, to see exactly

where you at.. As far as I can see this type of trading is brilliant Idea..

The Only problem is spread.. Let's say you place 3 trades (3 pairs BUY and SELL) that's 6 trades

some of the crazy pairs have up to 8 pips spread.. Ok, lets take 5 pips average, so right after

you place your trades you already down 30 pips (which some guys are actually trying to make in one day)

Heck, if someone could guarantee 30 pips a day, I'd take it, sure..
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  • #1,128
  • Sep 9, 2009 6:42pm Sep 9, 2009 6:42pm
Quoting treadline
yes thats what im talkiing about is the two platform, dailyfx and marketscope....
First pic is Dailyfx, secind is MarketScope and third is StaticOverlay MT4. Wich is the truth? I am starting to think that it might not be that important wich pair is on top of the other. Since the correlation should be high, that ties them together and they will be touching each other sometimes giving maybe some big drwadowns. I don't really know. I am still looking for a mathematical way of overlaying data pairs in a same coordinate system.

http://i25.tinypic.com/5wjojs.jpg
http://i29.tinypic.com/296ko3s.jpg
http://i32.tinypic.com/rivhg1.jpg
  • #1,129
  • Sep 9, 2009 6:51pm Sep 9, 2009 6:51pm
Quoting SkyzerFX
All I can tell you, unless you already know, you have to look and compare

all possible time frames H1, H4, D1, or even more, if you wish.. That will

give you the full picture.. Looking only H1 chart TF will tell you nothing!

It's like "$1.44/EURO" is that high or low? Well depends how you look at it..

You need to start from H1 then draw to H4 D1 and so on, to see exactly
where you at.. As far as I can see this type of trading is brilliant Idea
Just dig into it some more..
I agree. Before entering a trade, I check the hourly and the daily correlation values at MATAF. Another good site for that is Oanda's Infocenter. For example, the EURUSD/NZDUSD combination has a high correlation value on a weekly, monthly, 3 months, 6 months, 1 year and 2 years basis. You cannot be wrong with that combination, but check the hourly data to confirm.
  • #1,130
  • Sep 9, 2009 7:55pm Sep 9, 2009 7:55pm
Quoting chamane
First pic is Dailyfx, secind is MarketScope and third is StaticOverlay MT4. Wich is the truth? I am starting to think that it might not be that important wich pair is on top of the other. Since the correlation should be high, that ties them together and they will be touching each other sometimes giving maybe some big drwadowns. I don't really know. I am still looking for a mathematical way of overlaying data pairs in a same coordinate system.

http://i25.tinypic.com/5wjojs.jpg
http://i29.tinypic.com/296ko3s.jpg
http://i32.tinypic.com/rivhg1.jpg...

yes thats where i went wrong this morning. i only looked at marketscope but not dailyfx. mt4 charts dont really tell the truth about the pairs. so now if you would look at it i would be in positive territory but i didnt want that much drawdown again so i closed it with only -35 pips. yes i could of waited but man when emotions run wild its hard to say i will let it go and see. thats why demo should only be to learn the strategy but real trading should be on live accts as that will tell you how much you can tolerate the drawdowns. if only theres a way to really tell if the gaps will be closed then the emotions will be in check.
  • #1,131
  • Sep 9, 2009 7:58pm Sep 9, 2009 7:58pm
hey gothemcity hows your trading going? hope its well. what was your worst dd so far with this method? mine was -100pips. i tell you i was pulling my hair out sort of speaking.
  • #1,132
  • Sep 9, 2009 8:18pm Sep 9, 2009 8:18pm
I am down 113 pips, oh my goodness... when will the pairs converge....??

sweating buckets here
Attached Image (click to enlarge)
Click to Enlarge Name: chart2.gif Size: 83 KB
  • #1,133
  • Sep 9, 2009 8:22pm Sep 9, 2009 8:22pm
Quoting chamane
First pic is Dailyfx, secind is MarketScope and third is StaticOverlay MT4. Wich is the truth? I am starting to think that it might not be that important wich pair is on top of the other. Since the correlation should be high, that ties them together and they will be touching each other sometimes giving maybe some big drwadowns. I don't really know. I am still looking for a mathematical way of overlaying data pairs in a same coordinate system.

http://i25.tinypic.com/5wjojs.jpg
http://i29.tinypic.com/296ko3s.jpg
http://i32.tinypic.com/rivhg1.jpg...


I just verified this, Yikkes!!!!!!!!!!!!!!!!!!!!!

However Marketscope and dailyfx are the same. You have to scale to the exact same. All #'s on left, right and bottom have to be the same for both and you will see charts look the same. Now Marketscope vs MT4 static overlay....hmmmmm
  • #1,134
  • Sep 9, 2009 8:31pm Sep 9, 2009 8:31pm
Same Pair MT4 StaticOverlay vs MarkerScope. Almost similar but not quite.



Attached Image (click to enlarge)
Click to Enlarge Name: MT4.jpg Size: 117 KB


Attached Image (click to enlarge)
Click to Enlarge Name: MarketScope.jpg Size: 103 KB
  • #1,135
  • Sep 9, 2009 8:43pm Sep 9, 2009 8:43pm
Quoting jeffreytp
I just verified this, Yikkes!!!!!!!!!!!!!!!!!!!!!

However Marketscope and dailyfx are the same. You have to scale to the exact same. All #'s on left, right and bottom have to be the same for both and you will see charts look the same. Now Marketscope vs MT4 static overlay....hmmmmm
They might be the same, but wich one to choose? At what scale do you look your data to make sure you are correct? If I am right, MarketScope doesn't repaint the last data on the chart but adjust the rest of the curve according to the scale in use whereas Dailyfx and MT4 ajust everything. I would be tempted to select MarketScope, but what is really going on? That's what I want to know. What secures me the most in the whole process is that Dreanliner never lost a trade and that I chose high correlated pairs either in the short term and the long term.
  • #1,136
  • Sep 9, 2009 9:01pm Sep 9, 2009 9:01pm
i am not going to close the order...

I want to see where this will go...

It might just burn the account but it will be a good experience...

no pain no gain right

i just hope that the pairs come close tommorow when i wake up
  • #1,137
  • Sep 9, 2009 9:06pm Sep 9, 2009 9:06pm
Quoting chamane
They might be the same, but wich one to choose? At what scale do you look your data to make sure you are correct? If I am right, MarketScope doesn't repaint the last data on the chart but adjust the rest of the curve according to the scale in use whereas Dailyfx and MT4 ajust everything. I would be tempted to select MarketScope, but what is really going on? That's what I want to know. What secures me the most in the whole process is that Dreanliner never lost a trade and that I chose high correlated pairs either in the short term and the long term....

hey chamane becareful with marketscope. i used that this morning without verifing with dailyfx and i got burned. this morning gbpusd/eurjpy did not match but marketscope showed a very wide gap and i took that trade. but both went the opposite direction.

the trade your on is that live acct?
  • #1,138
  • Sep 9, 2009 9:25pm Sep 9, 2009 9:25pm
Quoting treadline
hey chamane becareful with marketscope. i used that this morning without verifing with dailyfx and i got burned. this morning gbpusd/eurjpy did not match but marketscope showed a very wide gap and i took that trade. but both went the opposite direction.

the trade your on is that live acct?
No, I want to learn more on overlaying before going on a live account. In the mean time, I am trading the way described in the first post and it is working quite well I must say. Right now, I am +18pips on CADJPY/AUDJPY and waiting to get some pips with it. I just don't want to get a big drawdown live as I am afraid it can happen.
  • #1,139
  • Sep 9, 2009 11:36pm Sep 9, 2009 11:36pm
i agree something isnt right which is the TRUE charts to use.. marketscope has screwed me before.
  • #1,140
  • Sep 10, 2009 12:50am Sep 10, 2009 12:50am
Quoting T.E.Lawrence
It seems like nobody has answered this question, so what's your view on this?
Dear TE Lawrence,

See p. 54 in this thread, post #803.

My best,

Lenoxer
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