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Hedge and Correlation Strategy

  • #1,761
  • Jan 28, 2011 9:31pm Jan 28, 2011 9:31pm
Quoting Pip Chaser
Last trade this morning for +10. Great weak with a total of +93 pips. Thanks DL & Scott for a great thread & programming.
This may not be a good question, and I may be behind on the overall concept.

On your trade, I looked at it and marked a few spots, can you explain why the trade was taken where you took it?

Thanks a lot.

cheers
Attached Image (click to enlarge)
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  • #1,762
  • Jan 28, 2011 9:46pm Jan 28, 2011 9:46pm
this is a amazing method i think ,last night i try this method in M1 and 4win 1 lost but the lost is great -72pips, i did not set the SL, i think if the diff walk through the 80 and continue to be above 80 line you will be the lost one, can anybody tell me how to solve this problem?
  • #1,763
  • Jan 28, 2011 9:54pm Jan 28, 2011 9:54pm
Monarch,

You trade when the yellow dotted line is above 80. Thats the difference between the 2. If you look, the eurusd would have been a buy there and it went up

Quoting monarch
This may not be a good question, and I may be behind on the overall concept.

On your trade, I looked at it and marked a few spots, can you explain why the trade was taken where you took it?

Thanks a lot.

cheers
  • #1,764
  • Jan 28, 2011 9:54pm Jan 28, 2011 9:54pm
Hi,

I have read the post and think that this strategy is great. I just have a couple of questions.

1. When I go to http://www.mataf.net/en/tools/01-01-correlation, they have different time frames for choosing the correlation, 5 min, hourly, daily and weekly. My question is which correlation table do we use? Also, I noticed that their was an indicater used to find highly correlated pairs. If I use that, do I leave all the settings the same or do I change anything?

2. Do we use use the 1-min or 5-min time frame. I think I want to use the 1-min but I want to hear your suggestions.

3. When do you trade? I am thinking about trading the Europe and U.S session but I would appreciate your suggestions.

And just to be safe, here are the rules to my understanding. Watch the correlated pairs on the 1-min chart, wait for the diffenence to be over 80%. Place the trades. And exit when the correlation gets to 50%. Is that correct?
  • #1,765
  • Jan 28, 2011 9:55pm Jan 28, 2011 9:55pm
Quoting Dreamliner
Roundrock, help us non-tech types understand how to use this indicator. Put it on one chart and then do what?
open any chart any timeframe. load the template posted by scott for corelation table. open indicators, remove the existing indicator and add this new indicator. thats all !!!

here is a screenshot. first number is corelation factor and second is current stoch diff
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  • #1,766
  • Jan 28, 2011 9:58pm Jan 28, 2011 9:58pm
Quoting scali71
Monarch,

You trade when the yellow dotted line is above 80. Thats the difference between the 2. If you look, the eurusd would have been a buy there and it went up
Thanks, I will put that on my notes for this week to watch, learning as I go.

Have a great weekend.

cheers.
  • #1,767
  • Jan 28, 2011 10:02pm Jan 28, 2011 10:02pm
Here is a template for 4 EURCAD pairs using 1.6

http://d01.megashares.com/dl/e66c816/#eurcad.tpl
  • #1,768
  • Jan 28, 2011 10:07pm Jan 28, 2011 10:07pm
Quoting monarch
This may not be a good question, and I may be behind on the overall concept.

On your trade, I looked at it and marked a few spots, can you explain why the trade was taken where you took it?

Thanks a lot.

cheers
Took the trade when the yellow line was > 60. I would have taken the trade you marked, however, I left for work.
  • #1,769
  • Jan 28, 2011 10:28pm Jan 28, 2011 10:28pm
I don't think it is possible to have 72 pip loss, trading positive pairs, on the 1M chart, as you would be out when yellow line retraced to 50 or 20. What pairs were you trading, and why did you get out with a huge loss?

Quoting 41413592
this is a amazing method i think ,last night i try this method in M1 and 4win 1 lost but the lost is great -72pips, i did not set the SL, i think if the diff walk through the 80 and continue to be above 80 line you will be the lost one, can anybody tell me how to solve this problem?
  • #1,770
  • Jan 28, 2011 10:32pm Jan 28, 2011 10:32pm
Quoting 41413592
this is a amazing method i think ,last night i try this method in M1 and 4win 1 lost but the lost is great -72pips, i did not set the SL, i think if the diff walk through the 80 and continue to be above 80 line you will be the lost one, can anybody tell me how to solve this problem?
What was your losing trade and when? I think your were probably trading EURUSD when it had a huge sell off (or similar pair like EURJPY). In that case, I would never short EURUSD after it broke a major trendline as well as news further suggesting downward moves.
  • #1,771
  • Jan 28, 2011 10:44pm Jan 28, 2011 10:44pm
Will this template trigger an alert on each of these currencies that gets over 80 (or whatever you set it at)? If so, it would be great to have 3 or 4 templates that would cover all pairs.

Also, how do we remove the top pair here (EUR/CAD EUR/CHF), as its Day1 average is only 60.

Quoting scali71
Here is a template for 4 EURCAD pairs using 1.6

http://d01.megashares.com/dl/e66c816/#eurcad.tpl
  • #1,772
  • Jan 28, 2011 10:56pm Jan 28, 2011 10:56pm
Would you want to remove it? The next day it may be in range. The template just gives you a snapshot of 4 pairs at once.

The alert should work if you go to indicator list the same one is llisted there 4 times and thats an option in the indicator
  • #1,773
  • Jan 28, 2011 11:10pm Jan 28, 2011 11:10pm
OK, that's great, makes sense.

Anyone want to develop a template for the other pairs? It would be great to have a template for:

EUR
GBP
JPY
AUD
CHF

Quoting scali71
Would you want to remove it? The next day it may be in range. The template just gives you a snapshot of 4 pairs at once.

The alert should work if you go to indicator list the same one is llisted there 4 times and thats an option in the indicator
  • #1,774
  • Jan 28, 2011 11:18pm Jan 28, 2011 11:18pm
I am looking back at eurcad eurusd from today and each time it went above 80 the high one never dropped in price it went up. The low one went up most times. Am I missing something here?
  • #1,775
  • Jan 28, 2011 11:24pm Jan 28, 2011 11:24pm
Quoting Dreamliner
Scott, on the Correlation Table Indicator, is it possible to remove duplicates? For instance, AUD/JPY AUD/NZD is also listed as AUD/NZD AUD/JPY, and the same with a few other pairs, such as EUR/AUD EUR/CHF and then listed against as EUR/CHF EUR/AUD. Just wondering if we can remove duplicates in some way? If not no problem.
OK DL, 1.4 has no duplicates. Here it is.
Attached File(s)
File Type: mq4 Tradable Correlations 1.4.mq4   10 KB | 1,256 downloads
  • #1,776
  • Jan 28, 2011 11:33pm Jan 28, 2011 11:33pm
Quoting Dreamliner
Will this template trigger an alert on each of these currencies that gets over 80 (or whatever you set it at)? If so, it would be great to have 3 or 4 templates that would cover all pairs.

Also, how do we remove the top pair here (EUR/CAD EUR/CHF), as its Day1 average is only 60.
LOL. I knew you will ask for this, here you go...

i didnt test the alert part, as market is closed, i copied scots code so it should work.

one changes. you need to open a chart in the timeframe that you want the stochs to be calculated and then load the template. this is to make sure you dont get same alert multiple times in same bar.

the alert message always shows you the first symbol as buy and second as sell, so this will tell you what to buy and what to sell.
Attached File(s)
File Type: mq4 Tradable Correlations_StochDiff.mq4   11 KB | 1,018 downloads
  • #1,777
  • Jan 28, 2011 11:35pm Jan 28, 2011 11:35pm
eurcad eurusd have a Correlation D1 of 65.4% so 65% of the time these 2 pairs move in the same direction. If we are going to buy one and sell the other shouldnt we be looking for ones that have a -xx correlation as they trade against each other
  • #1,778
  • Jan 28, 2011 11:37pm Jan 28, 2011 11:37pm
Quoting Kowalczyk
What was your losing trade and when? I think your were probably trading EURUSD when it had a huge sell off (or similar pair like EURJPY). In that case, I would never short EURUSD after it broke a major trendline as well as news further suggesting downward moves.
yeah you are right,i trade EU/usd cad yeah yesterday there was a huge down move of eurusd,as you said i should prevent trade in the S/R line point ,got it man thank you very much!
  • #1,779
  • Jan 28, 2011 11:39pm Jan 28, 2011 11:39pm
by the way can somebody tell me how to solve the MM problem for eaxmple use basket trade Ea ? and what is the SL of yours?
  • #1,780
  • Jan 28, 2011 11:45pm Jan 28, 2011 11:45pm
Wow! Now that is dedication, thank you! Perfect indicator!

Quoting smjones
OK DL, 1.4 has no duplicates. Here it is.
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