Hedge and Correlation Strategy

that is what a stochastic does - it provides a reading between 0 and 100... have a look back at my posts I explained how I trade it

Superbandam3 Thanks for putting your way to trade. I sure will serve me well as other members.
I hope that some expert on this topic will help you improve.

Sure I will be very useful to both novice like me as the odd expert on the subject.

Hi EricKamezou
Did you try stochastic different pairs indicator? If yes, you will see the % differential between 2 stochastic line. Then when the different between 2 line is above 80%, it triggers the trade.
Hope this helps.

Hello
I'm very interested in your strategy but from where did you get tyour indicators?

Hello all
The subject is becoming more and more confusing.
To be really helpfull, can anybody here write the complete strategy, giving all details and required indicators?
Many thanks

Zaatar,

the strategy was a bit cluttered last pages because of some new ideas and considerations. To get the idea of the main strategy, best to read post #1 and following. I made a pdf-summary some months ago with the imo most important contributions and may send it, if you PM me your e-mail.

josch

Dears: After following this thread almost 1 year I am playing with relative manual sucess changing stoch by EMA. Reason ? EMA move with price, Stoch do not move due is limiting from 0-100.

So, Somebody here can change the indi show 2 values of stoch to 2 values of MA ? Also, If you can, we need the numeric diference between :
MA_P1 = Movin Average Pair 1 to price 1
MA_P2 = Moving Average Pair 2 to price 2
Dif_P1_P2 = Dif between MA_P1 - MA_P2.

Can you give info about the moving average you are using?
If successfull, for how long have you been using your method and what is the succes rate?
Thanks for sahring

EMA= 1500
Rate= 90%
Daily Pips ( no full time ) = from 20 to 40

Thanks AlbertoFX
BUt for which value of DELTA do you enter a trade?
Also did you use this strategy for other paires? which ones?

Hello Dreamliner
I think I understood perfectly your strategy and I will start demo it next week. I got my MT4 setup ready for next week, with more than 20 pairs thanks to your clear explanation and your indicators. Many thanks
Can you tell us for how long have you been using this strategy and what is the success rate?
Can you also explain how do you calculate the lot sizes of your trades for example when you trade EURUSD vs CHFJPY

Were you able to get the complete strategy? If you did could you send aq copy of the strategy?

Thanks

I got a collection of posts in this thread explaining the strategy from josch
if you PM me I will send it to you.

I think Josch has pointed you in the right direction.
I did play the original correlation strategy, although the updated one does'nt differ much.
I do recommend if you want to go live with the strategy to incorporate some basic tools like trendline and candlestick analysis with the underlying pair eg. EURUSD GBPUSD = EURGBP, eg AUDUSD NZDUSD = AUDNZD. It turns out after a year and plus trading my hit rates is so high that i only has 2 losses this year. I can say that the hit rate can reach 90% ..i go for the usual 10 - 20 p tp with a emergency SL of 100p. Its a horrible risk reward but felt confident enough to trade this live for 1year plus...a few months more than i will have 2nd year anniversary of profitable trading lol.
I never ever did have this kind of consistency with a system before, even if the SL hit in a black swan, im confident i wil get back what i lose in a short amount of time.
Some times i wonder if i was the only one trading this live . We all know most will lose when correlation goes away, but trendlines analysis will keep the bad trades away. Also in 5 -6 months if i do keepup with the winning rate i will reach 100%win rate without any loss.Hopefully the sl wont hit ever..lol
I mainly trade the H4 but the trades are so few i went for H1..still got a good rate reaching for 10 - 20pips tp. Although it could reach for more i wouldnt want to worry about an opened trades...what i did usually was open trades.. close to platform or go to bed.Check it out a few hours later usually in tp already.
Whats weird was when i ditch the correlation in a test, trading only with the trend with trendline i start losing...but the combination of them is like the sky and the earth comparison...go figure.
Try to make sure to win 9 out of 10 trades at least...why? Less than that makes trading like a complete waste of time.Having 2 losses in a 10set of trades is like throwing away time and money which is precious..why go for 8/10??You should try go for 10/10 when you actually can all of that without hitting the SL. SL to me is like a emergency situation, a safety to prevent large losses thats all. You should work to get your entry right feeling confident so you can sleep at night without worrying.
Another advice, dont go for non correlated pairs.If you want to trade pairs other than EURGBP ...know their ATR..i used the daily to set the maximum SL ,thats how i get the 100 sl for eurgbp, other pairs i dont know..go get a atr indicator/calculator ,very useful to set SL which is not supposed to get hit. Dont try to overleverage, often a repeated advice but still important.
The biggest barrier that i have currently is the money not pips. I just cant feel when to increase the lot/compounding even after so many trades. I got 2 choices..trade even more frequently or gradually increase the lot...i think this is the part that will decide whether you make small amount of money or a large amount of money..but i think when i hit the 2 years mark i will play with bigger size gradually.
Go and see the whole FF for strategies that can last this long, i knew several threads..maybe 10 -20 threads max that can make money in a long term...but most garbage system can only last a few months..6 months mark is a bit generous..but a lot of systems are very vague...and some require so many pairs to be successful.I can say that you can make it even using only 1 pairs.Master your chosen pairs and then try to diversify...repeating the same hit rate as your mastered pair.
I have heard that some will average in after 100p > sometimes i heard traders average about 4 5 times total still end up in profit, but the trades takes about a month or so. I have averaged only once or twice but lastin about two weeks..it finally hit breakeven. Combine with trendline break/some divergence,some crossever i did not have to average ever.The first few months of live trading i did not have SL..but months ago i started to put SL since i knew i will get a high rate winners.
The weird thing is that S&R is useless to me, the times that i want it to bounce it breached the S&R and runs.Lucky me didnt trade based on S&R.S&R will only work in high tf imho.
Dont be greedy..go figure. Try to get winning streaks not a losing streak.Some years ago i have tried trending strategy scalping and bouncing S&R scalping...9 - 10 losses in a row was not rare at all..to me every SL hit is wasted time and money ..since you have to trade just to breakeven and recoup loses. So many business closed down when they have too many or too frequent losses.In forex, it meant death in thousand cuts.
Some times i wonder how a lot low risk high reward system makes money.SInce they loose most of the time, they have to depend on a trades which will be homerun which is rare. Since we all human, whatif...they slept in a signal, whatif they missed a trade which is the homerun one in a set of trades..because they had to pickup their kids in school.Ohh the cat died so i had to bury it hastily.Whatif i had to cook my own meal which takes one hour.Whatif i had diarehea i had to be in toilet for half hour.Whatif i had distractions left and right in a day. I cant trade 5 days a week 24/5.What if i had a good system but i usually missed the wining ones!!! Unless you are a robot, you cant trade without a high win rate. You could have r:r 1:2 or 1;3 but you must have high winning rate.In an exam you should try your damndest to get 90% up..try to do it...
Try try try try try try hardest and damnest...But once in awhile dont be upset the sl hit, because you know the next trades will be green..

Forgive my ramblings everyone...

How great must be the delta to enter the two pairs? Use an indicator with alerts?

Thank you very much superbandam3 for your post. It's really wonderful to find people here like you spending a lot of their time to help the others.
Regarding your strategy, I have few questions:
1) with TF H1 what is the average number of trades you can have per day?
2) are you trading only EURUSD/GBPUSD and AUDUSD/NZDUSD ?
3) Could you post here the tools you are using and the charts templates?
Thanks for your help

Answers to your question
1) For eurusd/gbpusd trades i do get 2 - 3 trades per week, more pairs means more trade
2) I exclusively trade EURGBP crosspair..it will take months or years possibly to master additional pairs at least for me lol..perhaps im a slow learner
3) Perhaps a few images will help
4) Caution...this is a result of 2years plus work..a loong time so digest carefully

This will look like garbage..but thats how i did it, on the first chart u will see EURUSD overlayed with GBPUSD which is blue,EURGBP is the red one for reference..normal market alignment ..EURUSD in the middle,EURGBP lowest or highest, GBPUSD is highest or lowest.. u will see a buy eurusd sell gbpusd or buy eurgbp for me...reverse for sells
But i wont pull the trigger yet , on the second chart on eurgbp i do something extra...i added iregr mq4 the two yellow curving line , google it ,default settings ,twink it if you want..the indicator looks for price trend weakness giving more power and probability of success .Near/Touch lower band buy signal, Near/touch higher band sell signal...mean reverting
Another trigger shown here trendlines...look at the pic ,look at the trendline ,a bull candle breaking and closing from the trendline confirms a buy signal..i will take this signal
The yellow line is the my target area 13ma ,or middle BBand
Dont trade if its above the middle bband ,vice versa for sells


-Indicators on the first chart Neutral hedge overlay mq4...the settings are obvious based on the first pic
-tsr daily range calculator mq4

This is my new years present for you ,haha..

I created an indicator to help you. It is similar to the MACD. You must attach the chart of the first pair

But how do you read this indicator?

MA_P1 = Movin Average Pair 1 to price 1
MA_P2 = Moving Average Pair 2 to price 2
Dif_P1_P2 = Dif between MA_P1 - MA_P2.

The red line is the Dif_P1_P2 or Delta

The blue bars is the Average Delta.

Values ​​are pips.