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Hedge and Correlation Strategy

  • #3,221
  • Jun 25, 2011 11:54am Jun 25, 2011 11:54am
Quoting Hugh Briss
Templates here, put them on a chart of the first pair listed. These are the only tradeable hedged pairs at the moment but as they change I will add more. ....
Hugh,

thank you contributing to the thread. I'm sure, DL will not understand this as taken over. The recent strategy of 'Hedge and Correlation' was born out of contributing by members and developing new ideas.

I've to admit, first thought was, what can we do with knowledge, that the currency pairs of two economics have a difference of ie 1,800 pips. But experienced traders know about the effectiveness of simplicity.

Did you make some tests or had a look over some pairs/TFs ref to the usability of this idea?

josch
trading is war - life is simple
  • #3,222
  • Jun 25, 2011 12:46pm Jun 25, 2011 12:46pm
Quoting josch
Hugh,

thank you contributing to the thread. I'm sure, DL will not understand this as taken over. The recent strategy of 'Hedge and Correlation' was born out of contributing by members and developing new ideas.

I've to admit, first thought was, what can we do with knowledge, that the currency pairs of two economics have a difference of ie 1,800 pips. But experienced traders know about the effectiveness of simplicity.

Did you make some tests or had a look over some pairs/TFs ref to the usability of this idea?

josch
To be really honest it just seems logical to me. If two pairs have a correlation then the number of pips difference between them will stay within a range and you should be able to spot the points where the pips difference may be about to drop back into the range.

Like I said I haven't perfected an entry or exit method completely yet but I am trialling this as from Monday on a live account with small lot sizes.

I think I have left an indicator out of the list that you will need, this does USDCHF when you apply it to the eurchf chart. The second one here will do the AUD properly on the GBP chart.
Attached File(s)
File Type: ex4 difference in pips between p1 and p2.ex4   2 KB | 825 downloads
File Type: ex4 difference in pips between p1 and p2 AUD.ex4   2 KB | 752 downloads
  • #3,223
  • Edited 7:47am Jun 26, 2011 4:25am | Edited 7:47am
Quoting Malik81
Some pictures of a step by step, for what I am doing.
Malik,

what you need on your chart, is:

OverlayChart
http://www.forexfactory.com/showthre...16#post2639016

Different Pairs (already done)

Basket Profit 2 Pairs
http://www.forexfactory.com/showthre...96#post4399796

Stoch Diff 2 Pair EAsq 2011.03.01.mq4
this is an EA
http://www.forexfactory.com/showthre...93#post4438793

josch
trading is war - life is simple
  • #3,224
  • Jun 26, 2011 6:37am Jun 26, 2011 6:37am
Quoting josch


Malik,

what you need on your chart, is:

OverlayChart
http://www.forexfactory.com/showthre...16#post2639016

Different Pairs (already done)

Basket Profit 2 Pairs
http://www.forexfactory.com/showthre...96#post4399796

Stoch Diff 2 Pair EAsq 2011.03.01.mq4
this is an EA...
Hi Josch

I remember seeing the Basket indi posted by Squalou before but I have never used it. I've been trading this with the Stoch Diff only. Would you please explain how you use the Basket profit indi?

The other thing is that the EA trades based on the Stoch diff. How do you get the indi and EA working together?

Thanks in advance.
  • #3,225
  • Jun 26, 2011 6:52am Jun 26, 2011 6:52am
I've started another thread (link below) to discuss my ideas as it is different to this method so rather than take over this thread I started my own. Do pop in from time to time.

http://www.forexfactory.com/showthread.php?t=300887
  • #3,226
  • Jun 26, 2011 7:10am Jun 26, 2011 7:10am
Quoting Zr-fx
Hi Josch

I remember seeing the Basket indi posted by Squalou before but I have never used it. I've been trading this with the Stoch Diff only. Would you please explain how you use the Basket profit indi?

The other thing is that the EA trades based on the Stoch diff. How do you get the indi and EA working together?

Thanks in advance.
I had the same questions in mind but felt that I've already asked a lot.
So I am trying to figure it out. But ya direct help would be great.
Cheerz all.
  • #3,227
  • Jun 26, 2011 8:02am Jun 26, 2011 8:02am
Quoting Zr-fx
Hi Josch

I remember seeing the Basket indi posted by Squalou before but I have never used it. I've been trading this with the Stoch Diff only. Would you please explain how you use the Basket profit indi?

The other thing is that the EA trades based on the Stoch diff. How do you get the indi and EA working together?

Thanks in advance.

Zr-fx,

I am using Squalou's indi for visual confirmation only. It's not related with the EA. Using the Indi, you are able to make different entries for lots to weight ie related to USD. Depending on the lot-size you get a bit different moving line.

josch
trading is war - life is simple
  • #3,228
  • Jun 26, 2011 9:57am Jun 26, 2011 9:57am
Ive gone through the 5 steps in post #1 and I got to a strange result.

I applied the stochastic different paier 1.6b on eurchf / cadchf.
On the first chart which is the EURCHF chart I enter the sencond symbol CADCHF and in the CADCHF chart I entered the second symbol as EURCHF, and got two different results? Is it possible?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurchf.png Size: 107 KB
Click to Enlarge Name: cadchf.png Size: 107 KB
  • #3,229
  • Jun 26, 2011 10:03am Jun 26, 2011 10:03am
Could someone kindly summerize the proccess in one post with steps to follow, all needed indicators, how to work on them, any needed info, I know it's in post 1 but obviously many things have changed since post 1 was last updated. I have so far downloaded all indicators that I came through and I am not sure if I even need some of them, and I am not sure if I am using them properly.

Regards

Malik
  • #3,230
  • Jun 26, 2011 10:10am Jun 26, 2011 10:10am
Quoting Malik81
Ive gone through the 5 steps in post #1 and I got to a strange result.

I applied the stochastic different paier 1.6b on eurchf / cadchf.
On the first chart which is the EURCHF chart I enter the sencond symbol CADCHF and in the CADCHF chart I entered the second symbol as EURCHF, and got two different results? Is it possible?
It is possible because in the first chart you used lower case and the second you used Upper Case?

Always use a symbol name that matches exactly what you have on the platform
  • #3,231
  • Jun 26, 2011 10:12am Jun 26, 2011 10:12am
Quoting josch
Zr-fx,

I am using Squalou's indi for visual confirmation only. It's not related with the EA. Using the Indi, you are able to make different entries for lots to weight ie related to USD. Depending on the lot-size you get a bit different moving line.

josch

Thanks Josch. I'll try it.
  • #3,232
  • Jun 26, 2011 10:13am Jun 26, 2011 10:13am
Quoting Malik81
Could someone kindly summerize the proccess in one post ...

Malik,

that's not so easy you may suspect, because some of the technical stuff was developed and some traders were/are using not the latest version. In one case -don't ask me which- the latest version of an indi wasn't usable.

So as I mentioned above, this is the setup you may use. And if you get as shown something like -200%, there probably is a general mistake like not using upper-case letters, because I think it's necessary to use correctly as your platform does.

josch
trading is war - life is simple
  • #3,233
  • Jun 27, 2011 9:44am Jun 27, 2011 9:44am
hi
I took a treade that looked ok today, but as the difference was going down the loss was increasing. I dont know if it is a normal thing that might happen or if I did something wrong?

Regards
Attached Image (click to enlarge)
Click to Enlarge Name: pic.png Size: 141 KB
  • #3,234
  • Jun 27, 2011 11:33am Jun 27, 2011 11:33am
Quoting Malik81
hi
I took a treade that looked ok today, but as the difference was going down the loss was increasing. I dont know if it is a normal thing that might happen or if I did something wrong?

Regards
Where is your overlay chart? You need the visual indication of having the other chart as well, which is what the overlay gives you. The Stoch Diff on its own is not enough. Sometimes you find the Stoch Diff jumps to 90% but the movement on the graph tells you the movement is small so you leave it.
  • #3,235
  • Jun 27, 2011 1:04pm Jun 27, 2011 1:04pm
Quoting Zr-fx
Where is your overlay chart? You need the visual indication of having the other chart as well, which is what the overlay gives you. The Stoch Diff on its own is not enough. Sometimes you find the Stoch Diff jumps to 90% but the movement on the graph tells you the movement is small so you leave it.
Zr-fx
Thanks a lot, the overlay chart shows the price of one pair only, so how is possible to know the quantum of movement?

Regards.
Attached Image (click to enlarge)
Click to Enlarge Name: OVERLAY.png Size: 88 KB
  • #3,236
  • Jun 27, 2011 1:13pm Jun 27, 2011 1:13pm
Quoting Malik81
Zr-fx
Thanks a lot, the overlay chart shows the price of one pair only, so how is possible to know the quantum of movement?

Regards.
Not sure what you mean by one price. In your chart the original pair is EurJpy for with the price is showing as a line chart (I use candles). The overlay chart shows the second pair.

I have the Stoch Diff on the same chart as well. Exactly like the others throughout this thread.

You really need to read the thread and see the setups.

Keep in mind that the overlay chart is always scaling and changing in size so it can and will fool you into thinking there is big gap when there really is not so you have to use common sense.
  • #3,237
  • Jun 27, 2011 3:47pm Jun 27, 2011 3:47pm
Quoting Malik81
Zr-fx
Thanks a lot, the overlay chart shows the price of one pair only, so how is possible ....
Malik,

yes, agree to post of Zr-fx ...

better don't use correlation of 76% (should be higher, ie >85-90)
better don't use M5 TF (should be higher, ie M15/M30 and more)
better use stochdiff as high as possible (82 maybe ok, but you should
have a visual feeling (looking at examples in thread and demoing it)

But, below the line, there are shown no technical mistakes on the chart.

josch
trading is war - life is simple
  • #3,238
  • Jun 27, 2011 4:10pm Jun 27, 2011 4:10pm
Quoting josch
Malik,

yes, agree to post of Zr-fx ...

better don't use correlation of 76% (should be higher, ie >85-90)
better don't use M5 TF (should be higher, ie M15/M30 and more)
better use stochdiff as high as possible (82 maybe ok, but you should
have a visual feeling (looking at examples in thread and demoing it)

But, below the line, there are shown no technical mistakes on the chart.

josch
It's highly appritiated, since my last post I've been readin all through the thread (again), it is much clearer now, especially the visuallizing issue.

Regards
  • #3,239
  • Jun 27, 2011 5:48pm Jun 27, 2011 5:48pm
Quoting josch
Malik,

yes, agree to post of Zr-fx ...

better don't use correlation of 76% (should be higher, ie >85-90)
better don't use M5 TF (should be higher, ie M15/M30 and more)
better use stochdiff as high as possible (82 maybe ok, but you should
have a visual feeling (looking at examples in thread and demoing it)

But, below the line, there are shown no technical mistakes on the chart.

josch
Josch

It is interesting you're using higher time frames. I stuck to the original TF of M5 but get a lot of DD which pushes me into recovery mode. I have not tried higher TF.

Which TF do predominately use? and how do find it?

Thanks

Z
  • #3,240
  • Jun 29, 2011 3:10pm Jun 29, 2011 3:10pm
How often are the correlated pairs updated on mataf? I've been experiencing an error lately some of the paiers when applying the indicator on it is giving me a way tooo far figure than the site.
an example is shown below!!!

thanks in advance.
Attached Image (click to enlarge)
Click to Enlarge Name: ERROR.png Size: 100 KB
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