Hedge and Correlation Strategy | Page 68 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Correlation + Momentum Strategy? 6 replies

MT4 MTF Correlation table and Correlation oscillator indicators 155 replies

InsomiaFX Correlation Double Hedge EA 66 replies

Looking for EA for Correlation Strategy 6 replies

Hedge strategy (not a hedge fund) 13 replies

Attachments: Hedge and Correlation Strategy
Exit Attachments

Hedge and Correlation Strategy

  • #1,341
  • Sep 17, 2009 9:52pm Sep 17, 2009 9:52pm
Quoting Dreamliner
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?
That's what I got out of reading his method. It's basically just trading into an anticipated correction.
  • #1,342
  • Sep 17, 2009 9:55pm Sep 17, 2009 9:55pm
Quoting 2+2=4ex
That's what I got out of reading his method. It's basically just trading into an anticipated correction.
I really hate counter trend trading, maybe that is why I couldn't make his system work. If the trend is your friend, trading countertrend is like dating your enemy. I'm sure some people make it work but I can't seem to.
  • #1,343
  • Sep 17, 2009 9:56pm Sep 17, 2009 9:56pm
Quoting Dreamliner
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?
I don't know what you mean by counter trend, but he uses that .25% difference between price and yesterday's close to identify divergence and to enter trades. I am always refering to the strategy I find on stocks with ratios:
http://www.pairstrading.net/eng/market_neutral.asp
http://luminouslogic.com/a-pairs-trading-example.htm
So if the ratio is out of 2xstdev (oversol/overbought or close), you buy or sell according to it. I use CCI and BB to measure the divergence. Since correlation is negative, you buy or sell both. With positive correlation, you buy one and sell the other. That how I understand his system.
  • #1,344
  • Sep 17, 2009 9:59pm Sep 17, 2009 9:59pm
Exactly. If the EUR/CHF goes up you short, if it goes down you long. This is simply counter trend trading, assuming EUR/CHF is a ranging pair.

Quoting chamane
I don't know what you mean by counter trend, but he uses that .25% difference between price and yesterday's close to identify divergence and to enter trades. I am always refering to the strategy I find on stocks with ratios:
http://www.pairstrading.net/eng/market_neutral.asp
http://luminouslogic.com/a-pairs-trading-example.htm
So if the ratio is out of 2xstdev (oversol/overbought or close), you buy or sell according to it. I use CCI and BB to measure the divergence. Since correlation is negative, you buy or sell both. With...
  • #1,345
  • Sep 17, 2009 10:12pm Sep 17, 2009 10:12pm
Quoting Dreamliner
Exactly. If the EUR/CHF goes up you short, if it goes down you long. This is simply counter trend trading, assuming EUR/CHF is a ranging pair.
I don't know if it's good or not, but it's been working for me so far. I am still practicing with it. Since EURUSD and USDCHF is one of the best correlated combination up to now, I think it's important to find a way to use it in a correlation strategy.
  • #1,346
  • Sep 17, 2009 10:48pm Sep 17, 2009 10:48pm
I stay away from negative correlation unless I don't mind waiting a few days and I have some 'pennies' to throw into the pot. I prefer tight correlations. Less stress and faster closings.
  • #1,347
  • Sep 17, 2009 11:23pm Sep 17, 2009 11:23pm
Quoting chamane
I don't know if it's good or not, but it's been working for me so far. I am still practicing with it. Since EURUSD and USDCHF is one of the best correlated combination up to now, I think it's important to find a way to use it in a correlation strategy.
Have you figured out what you would have done beginning on March 10th of this year?

"Did anyone get caught on the wrong side the the 10 - 16th March move and if so, how did you get yourself out without too many lost pips? I ask because during this time divergence moved ~4.75% and has since not re-correlated back to that point. In fact the most it's retraced since then is ~2.2%. I understand that there has been intraday retraces which the graph below does not show and could have been exploited, but generally entry at this point could not have been good, especially the big March 12 move."
  • #1,348
  • Sep 18, 2009 2:35am Sep 18, 2009 2:35am
well at the same time have any of these pairs we are trading with high correlation been blowing accounts trying to hold onto a hedge? do they ever come back too??
  • #1,349
  • Sep 18, 2009 3:16am Sep 18, 2009 3:16am
  •  tmal
  • | Joined Oct 2007 | Status: Arrogant FX Bastards Club Member | 24 Posts
Quoting Dreamliner
Exactly. If the EUR/CHF goes up you short, if it goes down you long. This is simply counter trend trading, assuming EUR/CHF is a ranging pair.
Counter trend trading - what does it mean? Directional trading? Spieler's method is not directional trading...
  • #1,350
  • Sep 18, 2009 7:34am Sep 18, 2009 7:34am
Quoting renski911
well at the same time have any of these pairs we are trading with high correlation been blowing accounts trying to hold onto a hedge? do they ever come back too??
Never had an account blown, no, but did lose 25% trading negative correlated pairs, which I don't do anymore.
  • #1,351
  • Sep 18, 2009 7:35am Sep 18, 2009 7:35am
Quoting tmal
Counter trend trading - what does it mean? Directional trading? Spieler's method is not directional trading...
Google "counter trend trading" if you're new to trading markets; it means trading against the trend. Spieler's method is to go short when the market goes long, and to go long when the market goes short, hence trading against the trend, or counter trend trading. It works great for some.
  • #1,352
  • Sep 18, 2009 8:39am Sep 18, 2009 8:39am
  •  tmal
  • | Joined Oct 2007 | Status: Arrogant FX Bastards Club Member | 24 Posts
Quoting Dreamliner
Google "counter trend trading" if you're new to trading markets; it means trading against the trend. Spieler's method is to go short when the market goes long, and to go long when the market goes short, hence trading against the trend, or counter trend trading. It works great for some.
Thx to trading guru But I think u do it in very similar way... When u r in trade and "a gap goes bigger" it's the same as trading against the trend, isn't?
  • #1,353
  • Sep 18, 2009 8:43am Sep 18, 2009 8:43am
Quoting tmal
Thx to trading guru But I think u do it in very similar way... When u r in trade and "a gap goes bigger" it's the same as trading against the trend, isn't?
Yes, it is, but slightly different .
  • #1,354
  • Sep 19, 2009 8:33am Sep 19, 2009 8:33am
I opened yesterday a EUR/USD Short and GBP/USD Long.
Entered because of a very large gap on 15min. Its aswell very big on 5 and 30min. chart and i combinated it with a RSI and Parabolic signal, which i'm using to measure the trend length and strength.
Quote
EUR/USD - Short - 1.4720
GBP/USD - Long - 1.6273
Currently: -25
Planing to add on: ~1.6110
http://www.forexfactory.com/attachme...1&d=1253365999

I'm not entering if RSI and Parabolic are not giving me a clear signal in connection with a nice already large gap, i think its very risky just to enter on a gap without any confirmation of an indicator because you cant know at any point how large the gap will become and ur drawdown may really become huge.

Anyway lets see what the next week will bring, im going to begin taking positions on my real acc.

have a nice weekend.
Attached Image (click to enlarge)
Click to Enlarge Name: eur_usd-gbp_usd.jpg Size: 69 KB
consistency wins
  • #1,355
  • Sep 19, 2009 11:21am Sep 19, 2009 11:21am
i got a gbp/jpy vs eur/jpy running drawdown so far -220 pips.. hopefully see a recovery!
  • #1,356
  • Sep 19, 2009 6:32pm Sep 19, 2009 6:32pm
Quoting renski911
i got a gbp/jpy vs eur/jpy running drawdown so far -220 pips.. hopefully see a recovery!

I'm in that as well with a big DD...waiting for GBP/JPY to rally.
  • #1,357
  • Sep 20, 2009 9:22am Sep 20, 2009 9:22am
You may find this indicator helpful for the timing of entries/exits.
Attached File(s)
File Type: ex4 Multi-Indic_Watcher.ex4   243 KB | 919 downloads
  • #1,358
  • Sep 20, 2009 11:26am Sep 20, 2009 11:26am
Scooby Doo,

Very interesting indicator. I am going to try it out next week.

I did change the indicator slightly so that it corresponds just one of the currency pair .
Attached Image (click to enlarge)
Click to Enlarge Name: c1.gif Size: 17 KB
  • #1,359
  • Sep 20, 2009 11:36am Sep 20, 2009 11:36am
Quoting scooby-doo
You may find this indicator helpful for the timing of entries/exits.
I am not able to use the indicator, Metatrader cannot find it. When I open it with MetaEditor, I get this:

http://i37.tinypic.com/30nfyi8.gif

Can you help?
Thanks
  • #1,360
  • Sep 20, 2009 11:42am Sep 20, 2009 11:42am
Quoting chamane
I am not able to use the indicator, Metatrader cannot find it. When I open it with MetaEditor, I get this:

http://i37.tinypic.com/30nfyi8.gif

Can you help?
Thanks
Same here
0 traders viewing now