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Red News Hedge Trading + EA

  • #181
  • Nov 27, 2015 7:40am Nov 27, 2015 7:40am
Good morning ,
If i have different ADR between 2 pairs , is it better to increase the size of the pair with lower adr?
Example (it is only an example) GBPNZD vs EURJPY :
GBPNZD : adr 300 , value pips o.7$ (equal to EJ)
EURJPY : adr 150 , value pips 0.7$ (equal to GN)
Correlated +80%
If i buy GBPNZD i must sell the doble size (0.20) of EJ or the size must stay equal (0.10 ) for both pairs ?
  • #182
  • Nov 27, 2015 7:46am Nov 27, 2015 7:46am
Quoting LvCa
Good morning , If i have different ADR between 2 pairs , is it better to increase the size of the pair with lower adr? Example (it is only an example) GBPNZD vs EURJPY : GBPNZD : adr 300 , value pips o.7$ (equal to EJ) EURJPY : adr 150 , value pips 0.7$ (equal to GN) Correlated +80% If i buy GBPNZD i must sell the doble size (0.20) of EJ or the size must stay equal (0.10 ) for both pairs ?
Hi LvCa,

I assume that ADR value is statistically valid (averaged over a long period, 200 days or more for example). Then, if you are going to trade for a long term, I would personally go for selling 0.20 EJ.
Trading is the hardest way to make easy money...
  • #183
  • Nov 27, 2015 8:09am Nov 27, 2015 8:09am
Quoting MathTrader7
{quote} Hi LvCa, I assume that ADR value is statistically valid (averaged over a long period, 200 days or more for example). Then, if you are going to trade for a long term, I would personally go for selling 0.20 EJ.
ok, thanks I appreciate your suggestion
  • #184
  • Nov 27, 2015 9:50am Nov 27, 2015 9:50am
Hi Math Trader 7
I have a question!!!
I am newest in this thread .
Today release red news of GBP . I selected eur/gbp and gbp/chf for trade with -80 correlation in h1 time frame.
I selected SELL/SELL in ea settings and after 30-40 min hit to stop loss .
If i selected BUY/BUY instead of SELL/SELL , my trades result was profit .
Is it true ???
My question is how can i understand BUY/BUY is true or SELL/SELL , for same as these pairs ?
Thank you
  • #185
  • Nov 27, 2015 10:06am Nov 27, 2015 10:06am
Quoting eghbaleh
Hi Math Trader 7 I have a question!!! I am newest in this thread . Today release red news of GBP . I selected eur/gbp and gbp/chf for trade with -80 correlation in h1 time frame. I selected SELL/SELL in ea settings and after 30-40 min hit to stop loss . If i selected BUY/BUY instead of SELL/SELL , my trades result was profit . Is it true ??? My question is how can i understand BUY/BUY is true or SELL/SELL , for same as these pairs ? Thank you
Hi eghbaleh,

I traded this red news with GBPUSD and EURGBP, going for SELL/SELL with 0.2 lot size, 10 USD take profit and 30 USD stop loss.
The reason I chose SELL/SELL is that I observed that GBPUSD is in down trend, so even if the red news would be good for GBP, it could temprary pull up the price (and it turn out to be good for GBP, and GBPUSD went up for one minute or so, but then it returned back to its main down trend). The EA closed both positions in a total profit of about 10 USD.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: GBPUSDM1.png Size: 29 KB
Click to Enlarge Name: EURGBPM1.png Size: 30 KB
Trading is the hardest way to make easy money...
  • #186
  • Edited 10:27am Nov 27, 2015 10:11am | Edited 10:27am
Quoting eghbaleh
Hi Math Trader 7 I have a question!!! I am newest in this thread . Today release red news of GBP . I selected eur/gbp and gbp/chf for trade with -80 correlation in h1 time frame. I selected SELL/SELL in ea settings and after 30-40 min hit to stop loss . If i selected BUY/BUY instead of SELL/SELL , my trades result was profit . Is it true ??? My question is how can i understand BUY/BUY is true or SELL/SELL , for same as these pairs ? Thank you
I traded the same pairs for the GBP release today and chose buy/buy. My reasoning? Look at EurChf. Which is stronger Euro or Swiss Franc? Is it about to hit a S/R level and reverse imminently? It is crucial you use your trading knowledge to decide where EurChf is going. Well, I thought the Euro was stronger so i would want to buy that. The loss on EURGBP was limited due to the strength of the Euro, whereas GBPCHF had a bigger gain due to the weakness of the Swiss Franc.
  • #187
  • Nov 27, 2015 11:39am Nov 27, 2015 11:39am
Quoting Traffex
{quote} I think, mostly the direction of the news-trade is equal to the direction of the last about 5 minutes of the watched pair.
Jarratt Davis also told this but personally i doubt it......
Simplicity is the ultimate sophistication - Leonardo da Vinci
  • #188
  • Nov 27, 2015 12:05pm Nov 27, 2015 12:05pm
This strategy requires double the trading cost.... Will this affect trading performance in the long run?
Simplicity is the ultimate sophistication - Leonardo da Vinci
  • #189
  • Nov 27, 2015 12:36pm Nov 27, 2015 12:36pm
Am I missing something? This strategy can be done by taking just one position... You pick the stronger currency and no need to hedge it...
  • #190
  • Nov 28, 2015 8:56am Nov 28, 2015 8:56am
Good morning everyone, I have finished the test for the first week of so much chaos in my trade.
Next week I have to improve absolutely becouse in the forex there is no room for sentiment and I, for now, I have too many of these: I always want two pairs are as close up to give a kiss (if then they make love , It would be even better) as in the old days , or... a clear divorce between them if they are correalte negatively and therefore incompatible.
Good weekend to everyone.
  • #191
  • Nov 28, 2015 3:13pm Nov 28, 2015 3:13pm
Quoting MathTrader7
{quote} Hi eghbaleh, I traded this red news with GBPUSD and EURGBP, going for SELL/SELL with 0.2 lot size, 10 USD take profit and 30 USD stop loss. The reason I chose SELL/SELL is that I observed that GBPUSD is in down trend, so even if the red news would be good for GBP, it could temprary pull up the price (and it turn out to be good for GBP, and GBPUSD went up for one minute or so, but then it returned back to its main down trend). The EA closed both positions in a total profit of about 10 USD. {image} {image}
Hi Math Trader 7
I will test it next week and hope to get profit .
Thank you so much
  • #192
  • Nov 28, 2015 3:15pm Nov 28, 2015 3:15pm
Quoting jen101
{quote} I traded the same pairs for the GBP release today and chose buy/buy. My reasoning? Look at EurChf. Which is stronger Euro or Swiss Franc? Is it about to hit a S/R level and reverse imminently? It is crucial you use your trading knowledge to decide where EurChf is going. Well, I thought the Euro was stronger so i would want to buy that. The loss on EURGBP was limited due to the strength of the Euro, whereas GBPCHF had a bigger gain due to the weakness of the Swiss Franc.
Hi Jen101
Thanks for your good advise .
  • #193
  • Nov 28, 2015 7:43pm Nov 28, 2015 7:43pm
Quoting techlover
New Version is Perfect {image}
pardon me, for post no. 18 by techlover, why do we open up one buy and the other sell when they are negatively correlated?
  • #194
  • Nov 29, 2015 6:48am Nov 29, 2015 6:48am
Quoting dimitri
Am I missing something? This strategy can be done by taking just one position... You pick the stronger currency and no need to hedge it...
If you know which way the news will go.......... Well, I don't
  • #195
  • Nov 29, 2015 6:43pm Nov 29, 2015 6:43pm
Quoting jen101
{quote} If you know which way the news will go.......... Well, I don't
The thing is... if you want the long term profitability with this system, you need to be on the right side of stronger pair(currency) most of the time. So it means to have more than 50% success rate - you need predict the outcome of news and be on right side, otherwise you will not make profit in the long run. Basically if you find the stronger currency then the outcome of the news is not so important but problem is finding currently strong currency. I did some backtesting with this system for USD/CAD and EUR/CAD from begining of the 2015. The main rule was enter trade couple of seconds before news. I chose only time when US and CAD news were announced togeher(for example, only US and CAD NFP together, US and CAD trade balance together etc). The results were great, around 500 pips. The positions were always long USD/CAD and short EUR/CAD. But similar results, minus trading cost, were if I enter only long USD/CAD. TP for this test was strictly on close of 3 minutes candle. These results are only possible because us dollar has been objectively stronger than cad for last months. I tried test this on 2013 and 2014, but results were break even(because usd not so strong at these times). My conclusion from this is to find stronger currency and enter only one, possibly two positions with hedge.
  • #196
  • Nov 29, 2015 7:11pm Nov 29, 2015 7:11pm
Quoting jen101
{quote} If you know which way the news will go.......... Well, I don't
But you still need to know it to get an edge.

The problem with this type of trading is that you are still entering a directional bet! This can be best compared with pairs trading in which you usually bet on the mean return of 2 financial instruments. You basically trade how 2 symbols behave relatively to each other, by hedging you still take a bet on which pair will move stronger than the other based on the outcome of the news.

What you are doing is hedge maybe 80% of the movement of the news but your 50% chance of success of being on the correct side of the news does not change. If you are correct the pair will move the same distance apart or together as they will in the opposite case giving you no edge at all.

Example: Pair 1 and Pair 2 are positively correlated and Pair1's value will increase if the news are good.

Positive News:

Long/Short +10
Short/Long -10

Negative News:

Long/Short -10
Short/Long +10

The problem is expectations of the news are priced in before the numbers are released meaning that is is only important if the number are better or worse than expected. Those expectations can be found in any news calendar and they come from some of the most reputable bankers (are we going to be more accurate than they are? probably not that's why they are professionals after all).

The exact same result can be achieved by trading a single pair with a smaller lot size. You might get some good results now because you tp is fixed and your sl is unlimited and you let it run until your basket is in profit but that will not yield long term profits.

This type of trading might be useful trading stocks as good news tend to affect the price more heavily than bad news decrease the value of a stock (at least that is what I have heard but I would need to do some number crunching on that one). I doubt that this philosophy can be applied to forex as you are trading pairs instead of a single underlying.

If I am somehow incorrect I am looking forward to someone pointing me out my mistake.
  • #197
  • Nov 30, 2015 4:15am Nov 30, 2015 4:15am
Looking at the ForexLive calendar at 3pm GMT we have Pending Home Sales as high impact, but not on FF calendar. I might give it a shot. EU and USDCHF are well negatively correlated, so I am trying to work out where EURCHF is going. I don't normally trade that pair and looking at that chart, I would really steer clear, but as I have to make a decision.... currently I would say Euro has the edge, so I would want to buy that. Of course, things can change in a few hours.

If Euro is strong, Swiss Franc weak, and we see USD go up, then the loss on EU would be limited. The gain on CHF would be much bigger relatively, so profit. If USD goes down, then we would see a bigger gain on EU and relatively smaller loss on Chf, so profit.
Attached Image (click to enlarge)
Click to Enlarge Name: EurChf.JPG Size: 456 KB
  • #198
  • Nov 30, 2015 9:50am Nov 30, 2015 9:50am
Quoting jen101
Looking at the ForexLive calendar at 3pm GMT we have Pending Home Sales as high impact, but not on FF calendar. I might give it a shot. EU and USDCHF are well negatively correlated, so I am trying to work out where EURCHF is going. I don't normally trade that pair and looking at that chart, I would really steer clear, but as I have to make a decision.... currently I would say Euro has the edge, so I would want to buy that. Of course, things can change in a few hours. If Euro is strong, Swiss Franc weak, and we see USD go up, then the loss on EU...
EURCHF fell through support, so I sold instead. I have now SL at 2R, because of volatility and extra spread around news time. It doesn't affect my previous trades. With SL at 2R I need to get the buy or sell right much more than half the time!
Attached Image (click to enlarge)
Click to Enlarge Name: usd news.JPG Size: 25 KB
  • #199
  • Nov 30, 2015 12:29pm Nov 30, 2015 12:29pm
Big news day tomorrow. I would like to trade the RBA rate as that is always a good mover, but that's 3:30am for me and I'm not prepared to lose my sleep to be sure which way things are going. Though I think AUDUSD and AUDJPY as a sell/buy. UJ is moving well upwards, currently in a bit of a pullback, but it should bounce up again soon. Anyhow, there's plenty more tomorrow.

If I'm right about this and time will tell, it could be worth a live account soon. My normal stuff is soooo slow!
  • #200
  • Nov 30, 2015 12:56pm Nov 30, 2015 12:56pm
Quoting jen101
Big news day tomorrow. I would like to trade the RBA rate as that is always a good mover, but that's 3:30am for me and I'm not prepared to lose my sleep to be sure which way things are going. Though I think AUDUSD and AUDJPY as a sell/buy. UJ is moving well upwards, currently in a bit of a pullback, but it should bounce up again soon. Anyhow, there's plenty more tomorrow. If I'm right about this and time will tell, it could be worth a live account soon. My normal stuff is soooo slow!
You are doing your homework very well!

P.S. You can set the EA to automatically open positions at the time you are asleep.
Trading is the hardest way to make easy money...
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