Hedge and Correlation Strategy

--------------

yes, I know. cost USD 19xx. very expensive

May be someone can develop 'Follow the Leader"-type Scalping system, e.g. using Indicator to spot Price difference (Delta) from 2 Positive Correlation pairs,

Thank you

Hi all........

apologies I dont really get to FF as much as I should (T2Winge is my main bag)

I believe that consistent profitablilty can be generated from Correlation strategies......

AUD, GBP and Euro all moving in same direction - but all in opposite direction to the Tag Team (USD & yen) is a nice signal to trade

of course the more currencies that go over to the tag team direction leaves even nicer move on the remaining currency(s) !

Ive heard of Dreamliner before from recomendations...will checkout the threads more

I'm certainly up for any follow the leader strategies.....

N

bookmarked

Dreamliner

Are you still playing this system and is your success still great.

We haven't heard from you in awhile which could mean 2 things

Not working anymore or working very well and no more time to discuss

Hey, good to see you still around Dreamliner. I remember you from his thread and a few other ones, these "hedges" , correlated pairs always fascinate me, I keep coming back to them time and time again.

Spieler's method is interesting to say the least, I back tested and fwd tested it with variations and it's nice to work with, low stress. I also followed his positions in the thread, it's counter trend, but not really. He goes counter-trend on a very short TF, but if you follow his positions, I don't think he ever had a position where he was against the larger trend. I think there was one that he mentioned that he had to open more trades for, but it wasn't as extensive as it should have been either. He trades either with the trend or in a ranging market, going counter trend with that strategy you will lose in the long run because you will need a very large account to be able to sustain the whole correction.
That strategy is based on the premise that EURCHF is like the spread between 2 instruments...now it sort of is, but it also has it's trends and times when it's highly uncorrelated (check correlation history, there's some very exceptional times). But, if you trade it with the trend (which you have to define) or in a ranging market, you can make very consistent profits as he has mentioned with his futures business. And yes, as someone mentioned, the idea comes from equity pair trading that is one of a hedge fund strategies.

Now, playing with these correlations is a similar idea, various instruments have various volatilities associated with them, please don't trade this or Spielers without stop losses because it won't be pretty. Correlations sometimes flip, and when that happens you will be in a deep hole. Now you can't set a stop loss since you trade two currencies but you can craw the two currencies and make a synthetic one for yourself or just take the effective cross. Easiest longer term testing is probably easiest to see in Excel since you can just map out all the prices and match up the graphs historically to see where they diverge and converge. With correlated pairs even with weights based on volatilities there are some longer term periods where the pairs diverge from each other and form trends so before trying this life please do the research and testing because it will be a waste of $.

Hope I shed some light if any, I've worked with both of these before off and on.

By the way Dreamliner, how have your carry trades been going, I heard you had some trouble somewhere, not sure why? Seemed like you had some refined strategies going.

Lawrence i agree with you. For me this is the best trading style till now. If i find something better ill let you know guys
for the most of the time im trading negative correlated pairs. my sl&tp is based on sum of $ profit/loss. i tried to trade + correlated pairs and after first succes(+30% of acc value in 1 week) i lost those % to breakeven
i found - correlated pairs easier to trade(gaps between them).

Thanks for these scripts!
I have been trading this method live for a week now with no losing trades and in increase in my account of 30%.

These scripts will make it much easier...

can anyone please post their live statement?

Regards,
Winsome.

Sounds good. Touch base in 6 months. Have you read the entire thread?

The are no live statements to post. This "strategy" died a long time ago.

The thread died, not so much the strategy. I have been using a variation of this in junction with some of my other stuff and it does work. Been + over the longer run (2nd year). Adequate capital and direction are key.

http://img412.imageshack.us/img412/7357/overlayq.jpg

Uploaded with ImageShack.us


This are The Screen Shot

Thanx mynor...good system...KISS...Keep It Simple n Smart
I like it....

WoW!! congrats...can you just let us know your strategy like when to open and close the trade?

Hi... can any one please let us know the exit and entry plan for this strategy?

Regards
Winsome

this indicator is awesome !!!!! my best tool !!!! how can I add NZDUSD to it ?????
thanks a lot .....
Ismail

what u mean by positively or negative correlaed pairs?

Positively means if one pair goes up - the other goes up too
negatively - if one pair goes up - the other goes down (does the opposite )

Hi guys. I have been trading only hedge. It should work as long as correlation is fine.

Todays EU and UC hedge trade