Hedge and Correlation Strategy | Page 92 | 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

  • #1,821
  • Jan 29, 2011 2:07pm Jan 29, 2011 2:07pm
Thanks guys for all the continual work and updates for the indicators and concept.

It will be interesting to see how these all play out in the coming weeks.

I have 8 charts on my screen now, all positive correlation pairs.

I am using SMJones Tradable Correlations 1.5 to choose pairs I will be watching.

Here is the screen shot of how I have it setup, trying to watch the percentage change, I also have the alert set to go off as per the indicator settings.

Cheers
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot.jpg Size: 220 KB
  • #1,822
  • Jan 29, 2011 3:41pm Jan 29, 2011 3:41pm
I posted template for yesterday for EURCAD with 4 pairs. Here are a few more
Attached File(s)
File Type: tpl #1.tpl   6 KB | 476 downloads
File Type: tpl #eurjpy.tpl   7 KB | 469 downloads
File Type: tpl #eurusd.tpl   6 KB | 516 downloads
  • #1,823
  • Jan 29, 2011 5:18pm Jan 29, 2011 5:18pm
subscribed....this thread does need more attention ...

Phanti.
Hero calls followed by margin calls...
  • #1,824
  • Jan 29, 2011 5:30pm Jan 29, 2011 5:30pm
Quoting navk
The safer entry is when the stoc difference is max. If you enter 80 % or less the risk is limited to 20 to 30 %. On top of it, one can be sure that at some point of time the stoc diff. will come down below 70 to 80 %. If you enter when the diff is 40 % the risk is 60 %.

Also it is worth to open stoc for different pair combinations and enter whichver is safer.
Hello. Interesting thread. Would a histogram of the stoc difference be helpful?

http://i52.tinypic.com/2rpqpl3.gif
  • #1,825
  • Jan 29, 2011 6:09pm Jan 29, 2011 6:09pm
Quoting Dreamliner
Wow, you da man!

I'm sure you are aware of the dangers of trading negatively correlated pairs, but as long as you're getting pips that's good. Just don't want one to get away from you someday.
I am not aware of the dangers. Would you please be kind enough to explain the dangers as you see it? Thank you, Dreamliner.
  • #1,826
  • Jan 29, 2011 6:13pm Jan 29, 2011 6:13pm
Hi, I just would like your opinion on something. I am pretty sure that this has been said before, but do you think that we can only trade on one pair? What I mean is:

If our signals tell us to go long EUR/USD and go short EUR/CAD, we are betting that the USD will get weaker and that the CAD will get stronger. We don't really care what the EUR does because it will affect both currencies. Do you think that we will be able to just short USD/CAD instead of placing trades on the EUR/USD and EUR/CAD?

I am not making a statement, I am just looking for opinions.
  • #1,827
  • Jan 29, 2011 6:14pm Jan 29, 2011 6:14pm
A quick backtest shows me good results (even better) with negative correlated pairs and, for my surprise, with no correlated pairs (correl < 15%).....
Maybe correlation is not the only useful variable for selecting pairs??
  • #1,828
  • Jan 29, 2011 6:22pm Jan 29, 2011 6:22pm
I really have no idea if this is a successful trading system even in the short turn, much less the long run. Some people got some good pips last week but time will tell.

Much credit goes to Caillou for changing this system to remove the autoscaling problem we were having, and to SMJones and Roundrock for their endless energy in creating indicators and EAs to help us test it. But the reality is we don't know if this is a successful trading system or not.

Quoting sergen4
Dreamliner ,
Thank you for starting this very useful-fantastic thread , and your continuing support . I guess this is a successful trading system to do in the long run ? As it has been a while since the thread started on date March 30 2009 and it still seems very active . Have a nice weekend everyone.
  • #1,829
  • Jan 29, 2011 6:22pm Jan 29, 2011 6:22pm
Subscribed and always happy to see great minds thinking outside the square.
  • #1,830
  • Jan 29, 2011 6:36pm Jan 29, 2011 6:36pm
Quoting Dreamliner
I really have no idea if this is a successful trading system even in the short turn, much less the long run. Some people got some good pips last week but time will tell...
what is certain is that the system will be scrutinized and tested by many people now. Different TFs, manual, semi Automatic and fully automatic tests results should flow in from Monday onwards. The underlying rationale of your system seems to be logical and sound. Lets hope it has legs.

Kind Regards
  • #1,831
  • Jan 29, 2011 6:38pm Jan 29, 2011 6:38pm
Please let us know the results of your findings if you have time, thank you.

Quoting Caillou
I want to say THANKS a lot to Dreamliner (the creator of the system), Scott (the creator of indicators) and Spud (without him and his idea of Mimic Price Stochastic 100, 1, 1 , this thread will not have been rebirth).

About Negative Correlated Pairs, I think it worth to be tested. How Stochastic reacts when Diff > 80% : did they converge quicker with positive correlated pairs or with negative correlated pairs? A backtest would be easy..... I will do it later.....
  • #1,832
  • Jan 29, 2011 6:39pm Jan 29, 2011 6:39pm
Thank you very much scali71!

Quoting scali71
I posted template for yesterday for EURCAD with 4 pairs. Here are a few more
  • #1,833
  • Jan 29, 2011 6:44pm Jan 29, 2011 6:44pm
Here is my plan to test this system in the coming week:

I have 25 pairs that are positively correlated above 80%. On Sunday night I will remove some of them if Oanda shows they have excessive spreads. Not sure what "excessive" is, but probably anything above 4 will get the boot.

I am planning on taking every trade that closes above 80% and exiting at 50%, unless not in profit, in which case I will close at 20%.

I use a spreadsheet called Trading Journal Spreadsheet and I will post screenshots of my live trading. I do trade live, not demo, but only with very small lot sizes.

So that is my plan. Do any of you have different plans that this for the upcoming week? If so, list them here and let's see what kind of testing we will have.

Thank you for participating.
  • #1,834
  • Edited 8:55pm Jan 29, 2011 7:01pm | Edited 8:55pm
Quoting Dreamliner
Here is my plan to test this system in the coming week:

I have 25 pairs that are positively correlated above 80%. On Sunday night I will remove some of them if Oanda shows they have excessive spreads. Not sure what "excessive" is, but probably anything above 4 will get the boot.

I am planning on taking every trade that closes above 80% and exiting at 50%, unless not in profit, in which case I will close at 20%.

I use a spreadsheet called Trading Journal Spreadsheet and I will post screenshots of my live trading. I do trade live, not...
I will be trading only the major currencies with a correlation above 80%. I will also only be trading one currency pair. By that, I mean instead of shorting EUR/CAD and going long EUR/CAD, I will simply go short USD/CAD (I think this will save pips from the spread, just my opinion). In at 80% and out at 20% on the 5-min. chart, (regardless if in profit or loss).

Also, I have a question, with your system, if it reaches 50% and has a small loss you would keep your position open, right? What the correlation goes back up and your losses keep on piling up. Will you have a stop loss or let the position run?

Good luck to all
  • #1,835
  • Jan 29, 2011 7:14pm Jan 29, 2011 7:14pm
I am watching this thread with interest.

Regarding the templates posted...I don't see their purpose as no indicators are attached to them. What are they for?
  • #1,836
  • Edited 7:45pm Jan 29, 2011 7:22pm | Edited 7:45pm
Quoting Dreamliner
So that is my plan. Do any of you have different plans that this for the upcoming week? If so, list them here and let's see what kind of testing we will have.

Thank you for participating.
You had a safe trip, good to see you posting your proposed plan for the coming week.

I am only going to keep 8 correlated pairs on my screen, I may change those as I see other pairs changing percentages. I also refuse to take trades with pairs that are 5 pips or more in spread.

As for now I only plan on trading (short trades), and from what I have seen in all of my analysis since updating all the indicators is that when the stochastic lines cross 80 blue or red, either one, I will note the opportunity present, from there I will only give interest to the setup if the red or blue line press up and hit the 95%, and when the yellow line reaches the 80% line, I will then be ready for my short setup.

For now, it is the safest setup I have seen, as far as just taking a trade when the candle closes above 80 or 95 line, I am not really confident, I will need to see some confirmation at that point, say a 5m or 15m rejection candle, or a lower break of the current move up, maybe the yellow line falling back under the 80.

I need to see this live in the moment, and will probably watch the 1m more then most time frames so I can have screen time with the indicators and such.

I will post any trades I take, and these will all be live trades on my Oanda account.

Thanks for all the information.

Cheers.

Note: This setup does not show the overlay price, which only shows at the current time, but if stoch was showing it, then I am sure it is correct at the time.
Attached Image (click to enlarge)
Click to Enlarge Name: trading idea.jpg Size: 107 KB
  • #1,837
  • Jan 29, 2011 7:38pm Jan 29, 2011 7:38pm
Quoting newark18
I am watching this thread with interest.

Regarding the templates posted...I don't see their purpose as no indicators are attached to them. What are they for?
They give you 4 or more charts on one, otherwise you'd have to have all those charts open.
  • #1,838
  • Jan 29, 2011 7:50pm Jan 29, 2011 7:50pm
1. i modified the corelated table indi to show the combined spread , this will give me hint on what to avoid

2. i created a multi pair ea, you can enter 10 sets of pairs and entry/exit criteria for each set. the ea will place orders as per entry and closes as per exit. right now i am only planning 8 +ve cor and 2 -ve cor pairs. based on spread if i get more, i will load the ea on another chart so that i can trade 10 more sets

3. i am keen on testing how this works on higher TF like H1, H4. i can wait and get more pips. i am try few of the majors on higher TF like H1
  • #1,839
  • Jan 29, 2011 8:06pm Jan 29, 2011 8:06pm
Is there a way to remove the grid lines from the overlay indicator, I have changed them to black for a black screen and they are still present, I was hoping for no price lines/grid color.

Thanks in advance.
  • #1,840
  • Jan 29, 2011 8:22pm Jan 29, 2011 8:22pm
The templates are your indicators. Thats all you need to place the trade. You need nothing else. You know which is high and which is low so. Trade the rule and not the price indicator. Leave all emotions at the door. Watching the price while you trade causes psychological barriers.


Quoting newark18
I am watching this thread with interest.

Regarding the templates posted...I don't see their purpose as no indicators are attached to them. What are they for?
10 traders viewing now