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Hedge and Correlation Strategy

  • #3,241
  • Jun 29, 2011 4:08pm Jun 29, 2011 4:08pm
Quoting Malik81
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.


If the correlation is more than 70 or more than 80,it means a higher correlation positive. But if the correlation is -70 ou -80,it means a higher correlation negative. And here is -1.5, so he has no correlation much good each other.
It sound will be danger in the trade if we want to trade these two currency.
I hope i have answered your question.
  • #3,242
  • Jun 29, 2011 4:21pm Jun 29, 2011 4:21pm
Quoting Ilikehedge
If the correlation is more than 70 or more than 80,it means a higher correlation positive. But if the correlation is -70 ou -80,it means a higher correlation negative. And here is -1.5, so he has no correlation much good each other.
It sound will be danger in the trade if we want to trade these two currency.
I hope i have answered your question.
Thanks but the question is if you look at the mataf chart you will see it is +97% but on the chart it gives -1.5%, it happened a lot today with many currencies? So why is it different?
  • #3,243
  • Jun 30, 2011 4:00pm Jun 30, 2011 4:00pm
Quoting Malik81
Thanks but the question is if you look at the mataf chart you will see it is +97% but on the chart it gives -1.5%, it happened a lot today with many currencies? So why is it different?
You have to look at the Daily correlation. Right now on Mataf it is -0.7%. Where did you get 97% from?

Have you gone through the rules?
  • #3,244
  • Jul 2, 2011 12:40pm Jul 2, 2011 12:40pm
Quoting Zr-fx
Josch
It is interesting you're using higher time frames. ...
Zr-fx,

as far as I remember, the original TF of Dreamliner was M15. I never tried M5, but used M15. Switched to M30 some months ago to get higher pip-ranges. I make no backtests, only forward, so it's try and look (ref the TFs). Last 2 weeks markets were so correlated, I got only 1-2 signals. So - trading the higher TFs you really need EA + alarm.

And - I never tried and checked this - other source talked about digging whole only, if you are using small TFs.

josch
trading is war - life is simple
  • #3,245
  • Jul 2, 2011 12:43pm Jul 2, 2011 12:43pm
Quoting Malik81
Thanks but the question is if you look at the mataf chart you will see it is +97% but on the chart it gives -1.5%, it happened a lot today with many currencies? So why is it different?

Malik,

also check your Corr-Indi settings. As mentioned in last post of zr-fx, look for daily and 50 days.

josch
trading is war - life is simple
  • #3,246
  • Jul 3, 2011 3:55am Jul 3, 2011 3:55am
I like a lot this indicator.
In my opinion the best way to take advantage of trading 2 correlated pairs is using this indicator to follow the trend instead of going against the trend on the second or on the third standard deviation level.
And of course trading 1H, 4H or higher.
We can see much more stable trends than in single pairs.
For lot sizes I think we should use ATR or another volatilily indicator.
Just my thoughts.
  • #3,247
  • Jul 5, 2011 1:07pm Jul 5, 2011 1:07pm
First of all great thread guys!!! Your strategy looks very interesting.

I've started to read it few days ago and yesterday (after I finally understood completely how to do it) decided to do some testing. My results are +26 pips yesterday and +21 pips today (on E/U and G/U) so it looks promising. One advantage I see in this strategy is that you don't have to worry what particular pair will do because in the end you'll be profitable anyway. So if it's going to give me even as much as 20 pips of almost sure profit every day I'm into it. So great job and many thanks!!!! If I will find some improvements I will also share it with you

Cheers,
  • #3,248
  • Jul 14, 2011 2:44pm Jul 14, 2011 2:44pm
Special thanx to Josch and all that have contributed to this thread, I've been on this strategy for a a couple of weeks and noticed this:

1) I've been trading the hourly chart, much fewer deals but huge gaps and much less risk.

2) I am now trying to deal the daily or even the weekly charts but I am trying to see what the diff should be; deffinately not 80 I am currently watching it and will see what happens, I will try it on a demo account. I believe it might work

Thanx again all especially Josch
  • #3,249
  • Jul 16, 2011 2:38pm Jul 16, 2011 2:38pm
Quoting Malik81
Special thanx to Josch and all that have contributed to this thread, I've been on this strategy for a a couple of weeks and noticed this:

1) I've been trading the hourly chart, much fewer deals but huge gaps and much less risk.

2) I am now trying to deal the daily or even the weekly charts but I am trying to see what the diff should be; deffinately not 80 I am currently watching it and will see what happens, I will try it on a demo account. I believe it might work

Thanx again all especially Josch

hope you can report the tests!

for hourly charts, i have tested them as well but i got few losses... but those losses were critical... what entry&exit are you using??

thank you
Jamie
  • #3,250
  • Jul 17, 2011 7:36pm Jul 17, 2011 7:36pm
Quoting Jhfx
hope you can report the tests!

for hourly charts, i have tested them as well but i got few losses... but those losses were critical... what entry&exit are you using??

thank you
Jamie
The same 80 as entry, and exit whenever I feel happy with the money, most deals I close around 65 and make about 30-40 pips, in ALL cases if I waited it would have gotten to below 40, but I am never willing to take the risk.
  • #3,251
  • Jul 18, 2011 2:09am Jul 18, 2011 2:09am
Quoting Malik81
The same 80 as entry, and exit whenever I feel happy with the money, most deals I close around 65 and make about 30-40 pips, in ALL cases if I waited it would have gotten to below 40, but I am never willing to take the risk.

do you have specific pairs you always trade with??--or not with...?
or do you just look at tables and find one there...?

thank you,
Jamie
  • #3,252
  • Jul 18, 2011 8:25am Jul 18, 2011 8:25am
Quoting Jhfx
do you have specific pairs you always trade with??--or not with...?
or do you just look at tables and find one there...?

thank you,
Jamie
Please keep in mind I am very new to this and cross check every single word I say; dont take it for granted, I have no specific pairs, I open mataf and check all pairs on daily basis and then pick whatever is +75 or higher on the DAILY table.
  • #3,253
  • Jul 18, 2011 8:27am Jul 18, 2011 8:27am
Will this work on Gold Silver hedge? Should someone concider the difference in contract sizes?
  • #3,254
  • Jul 18, 2011 1:20pm Jul 18, 2011 1:20pm
just a quick question i came up with...

do u guys use Mataf? or correlation table(MT4-indicator)?

even though it is at same ...it gives different values sometimes...

some are matching...but some are not...

which one do u guys use to see the correlation?

cheers,
Jamie
  • #3,255
  • Jul 18, 2011 1:25pm Jul 18, 2011 1:25pm
Mataf: AudNzd/AudJpy: 54.3

Indicator: AudNzd/AudJpy: 48.4

this may not be critical now, but later it will be...around 65~70( got to decide enter or not)

thoughts & concerns are always welcome~

cheers,
Jamie
  • #3,256
  • Jul 18, 2011 6:49pm Jul 18, 2011 6:49pm
Hello All, (thanks to every person who made the great stuff here!!)

I am a fan of this System but as every system which goes countertrend here's
a hint for all :

There are pairs which have a correlation of more than 75% (e.g. GBP/USD , GBP/CAD ) BUT:

on 5 minutes you get a signal (stocc. -80), pipdifference 30 Pips.
on 15 minutes you get no signal (stocc. -50), pipdifference 5 pips.
on 4 hours you get no signal (stocc. -10), pipdifference 140 pips .

So be aware: Only because on 5 minutes it moved 30 pips away from each other, there can be more to come !
(I look at some pairs which had almost 1000 pips difference in the peak !! coming back to equal).

The question for short term trader is: Is there a solution by money/risk management to trade by 5 or 15 minutes ? May be. May be if no news are coming but be warned by my comment here.

I have not the time to check this system entirely (e.g. trading only after NY-Close to JP-open) but I guess you can make it.

The problem taken trades which are gone 500 pips away from each other
is that there can be added additional 500 pips... until it comes back. Not suitable for me.

Any thoughts/solutions ?

Jack

PS: I think I found the problem, mentioned earlier somewhere: The BIG problem is, that if NOT the main currency (GBP/USD, GBP/CAD) of the traded pairs is driven by news but for example the USD, GBP/USD can make a big move while GBP/CAD is on the sidelines.
That is the main problem. As one experienced trader said before: Be aware of at least 1000 Pips difference before coming back.
It's a pitty, I like the system, I like the idea. May be if I have time, I try to locate a moneymanagement and timeframe for trading on lower timeframe than daily.

Thanks for your efforts !!
  • #3,257
  • Jul 18, 2011 7:23pm Jul 18, 2011 7:23pm
Ok, I missed one big advantage: Some pairs offer up to 3 possibilities a day to gain 5-15 pips per trade. So... If you get hit by a 300 pip-drawdown it should be ok. I have to check this by the gain per month (average) and possibility to get a huge drawdown. I let you know...
  • #3,258
  • Jul 19, 2011 7:53am Jul 19, 2011 7:53am
quick question about the correlation on mataf,

does "daily" change every GMT 0000~ 2400?

what i think----------

mataf daily - by GMT

correlation table - according to your broker time

so, of course it is different!

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

which one do you guys use?
  • #3,259
  • Edited 1:16pm Jul 20, 2011 1:14pm | Edited 1:16pm
Is anyone using the EA on the 15M TF or higher?

Is anyone using open over 90% and close under 10% or something similar?

Have you tried anything like that?

If yes, how is going?

I am thinking about trying something like that on the 1HR TF.

I would appreciate any thoughts or suggestions.

Thank you
  • #3,260
  • Jul 20, 2011 3:55pm Jul 20, 2011 3:55pm
I also have a couple questions about the EA.

Is there a maximum number of charts you can have this EA running on before Mt4 Crashes?

Can I use the EA on on the same combo pairs in 2 different time frames?

ie, for example, EURUSD - USDJPY - can I run the EA on this combo in the 15M and 1H at the same time? (in different chart windows off course)

I am using the 2011.03.01 version by the way.

I thank y'all in advance for the awesome thread!
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