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Hedge and Correlation Strategy

  • #1,321
  • Sep 16, 2009 9:43pm Sep 16, 2009 9:43pm
would also like to add that whenever the EurUsd hits its peak, possibly ~1.4800-1.5000, there will be alot of pips to be made on EurUsd vs. UsdChf. I advise small lots to start in case it continues its move beyond 1.5000
  • #1,322
  • Sep 16, 2009 10:01pm Sep 16, 2009 10:01pm
My testing has been limited so far, but tight correlated pairs is working good for me. Just aiming 10-20 pips per trade. For each pair, I get 1 or two trades per day. But it could change in the long run.
  • #1,323
  • Sep 16, 2009 10:04pm Sep 16, 2009 10:04pm
Keep us updated on your progress.

Quoting Gothamcity
hello forex commmunity,

For those of us who are not tolerant of high drawdowns,

I recommend exploiting the AUD / USD & NZD / USD correlation
as the pairs move extremely similar to each other
and no extreme DDs are experienced...

After I got burnt in GBP / USD & GBP / CHF trade last week,
I am going for much tighter correlations and so far having success...

Any thoughts?

Again I would like to thank dreamliner for starting this thread...
  • #1,324
  • Sep 16, 2009 10:05pm Sep 16, 2009 10:05pm
Quoting chamane
My testing has been limited so far, but tight correlated pairs is working good for me. Just aiming 10-20 pips per trade. For each pair, I get 1 or two trades per day. But it could change in the long run.
Why do you go for only 10-20 pips per trade? It would seem like your drawdown would be much more than that.
  • #1,325
  • Sep 16, 2009 10:10pm Sep 16, 2009 10:10pm
Quoting Dreamliner
Why do you go for only 10-20 pips per trade? It would seem like your drawdown would be much more than that.
You are probably right. I got burnt last week with a huge DD. I don't like those situations since there is no stop loss. I prefer getting 40 pips safe out of two trades per day. I just entered AUDUSD sell / NZDUSD buy. I'll let it run more.
  • #1,326
  • Sep 16, 2009 10:47pm Sep 16, 2009 10:47pm
I just made +7 pips on this one. I use the 5 min chart. In this case the third pair (EURNZD) got overbought (using CCI21 and BB) in the 5min, 15 min and 1hr chart. So when price gets out of OB in 5min, I enter (first arrow). At this point, there is a large gap between AUDUSD and NZDUSD. I get out when they meet (second arrow). Sometimes I get more pips, sometimes not.

http://i30.tinypic.com/2ibk9zd.gif
  • #1,327
  • Sep 17, 2009 2:17am Sep 17, 2009 2:17am
Quoting jeffreytp
+50 pips for the week

monitoring:
ZU/EU
AU/EU
AU/ZU

Biggest DD seen was 75
Hi , what is ZU?
  • #1,328
  • Sep 17, 2009 3:17am Sep 17, 2009 3:17am
Quoting bravester
Hi , what is ZU?
Bravester

I guess we could ask what is AU?
From that we could then guess what ZU would be.

My guess is AU stands for AUD/USD
and ZU stands for NZD/USD

..... that would be my guess....
  • #1,329
  • Edited 6:36am Sep 17, 2009 5:07am | Edited 6:36am
Quoting Gothamcity
Hello forex community,

I entered a trade gbp /usd gbp chf

last monday...

I was down 200 pips today so I finally pulled the plug

Be very careful with this strategy please...

I don't think I will implement this strategy for a long time
unless adjustments are made...

Good luck everyone
When I first tried this method. I got KILLED!
The reason for this is because this trade is a spread and NOT a riskless arbitrage.
A spread is just as risky as a naked trade!
I am trying one more time and this time, if the trade shows a 25 pip loss I am out because that loss can become 400 pips.
I hope this helps.
Also the risk/reward ratio is poor.
  • #1,330
  • Sep 17, 2009 6:24am Sep 17, 2009 6:24am
Quoting brucech
Bravester

I guess we could ask what is AU?
From that we could then guess what ZU would be.

My guess is AU stands for AUD/USD
and ZU stands for NZD/USD

..... that would be my guess....
Sorry I made a typo, NU is correct, not ZU.
  • #1,331
  • Sep 17, 2009 6:25am Sep 17, 2009 6:25am
Quoting finally
When I first tried this method. I got KILLED!
The reason for this is because this trade is a spread and NOT a riskless arbitrage.
A spread is just as risky as a naked trade!
I am trying one more time and this time, if the trade shows a 25 pip loss I am out because that loss can become 400 pips.
I hope this helps.

Don't waste your time.... -60 pip are possible, I have seen it just this week with enev the highest correlated pairs.
  • #1,332
  • Sep 17, 2009 7:56am Sep 17, 2009 7:56am
I had high hopes for this method. I used to use something close, buying pairs that gave high roll over interest but all were correlated. I charted the totals on the daily and waited for that number to swing down then waited for it to start going up and i would by more, exiting when it reached swing highs. I ended up taking a 8000 account to 24000 in less than a year. Seems that this method would work better with large account stops vs individual trade stops.
  • #1,333
  • Sep 17, 2009 8:29am Sep 17, 2009 8:29am
Is thier any script that will place buy,sell with differant lots size ?
I know thier are scrips here, but i only see them buying ,selling the same lot
  • #1,334
  • Sep 17, 2009 8:40am Sep 17, 2009 8:40am
Quoting Petronix
I'll leave you be... good luck
Well, both my trades GJ and GU are finished up with profit of course

first they went underwater. Anyways talking about freaking so called

"scalping for serious traders" lol.. Based on signals take 6 trades

just penny trades all of them LOSS with Stop Loss.. How that's even possible?

I'm looking into D1 charting right now with BANDS indies.. It doesn't produce

as much trades but M5 trading with SL it's just NUTS.. It's like throw money

against the wind..
Viewer Discretion Advised: Shall we shag now or should we shag later? :-)
  • #1,335
  • Sep 17, 2009 8:57am Sep 17, 2009 8:57am
Is anyone making consistent money using tis method?
  • #1,336
  • Sep 17, 2009 8:58am Sep 17, 2009 8:58am
Guys would be better Idea if we could just post here your findings

What pairs now actually has attractive spread, cause it takes lots of time

to just dig charts.. When I find something I would post. Thanks
Viewer Discretion Advised: Shall we shag now or should we shag later? :-)
  • #1,337
  • Sep 17, 2009 11:17am Sep 17, 2009 11:17am
Hi all,

Nice method read alot about it, now in this thread,

Im now testing it a little on a demo acc.

5min.
Buy GBP/USD and Sell GBP/JPY
Exited with an Profit of +~60 Pips when they crossed each other.

now i have a
Sell EUR/USD and Buy EUR/JPY
on a 4h Chart.
Still floating.. i think this is gonna be a long-term trade.

Anyways thanks and i will keep you updated on my further testings.

I think if you can really test this strategy and get a feeling for the size of the gaps u can make good money out of it, if you keep disziplined and dont risk to much.

btw. im using parabolic and RSI its helping me determining the strength of a movement and encouraging me to enter the market in specific situations.

cya (sry 4 my bad english not my main language)
consistency wins
  • #1,338
  • Sep 17, 2009 11:45am Sep 17, 2009 11:45am
For the negatively correlated pairs has anyone tried doing 2 buys, or 2 sells as opposed to the sell top buy bottom?
  • #1,339
  • Sep 17, 2009 12:31pm Sep 17, 2009 12:31pm
Quoting weekapaugh
For the negatively correlated pairs has anyone tried doing 2 buys, or 2 sells as opposed to the sell top buy bottom?
That's what I trade with EURUSD/USDCHF. Have a look at Spieler's method.
  • #1,340
  • Sep 17, 2009 7:00pm Sep 17, 2009 7:00pm
Quoting chamane
That's what I trade with EURUSD/USDCHF. Have a look at Spieler's method.
Chamane, isn't Spieler's system that when EUR/CHF goes up a certain amount (.25 from the open) that you sell the hedge pairs, and vice versa?

If so, aren't you just trading counter trend?
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