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Simple Correlation Indicator System

  • #1
  • First Post: Edited Oct 11, 2016 4:36am Jun 4, 2016 4:35pm | Edited Oct 11, 2016 4:36am
Hey guys,

Have been using this correl8 indi on XAUUSD using multiple TF with some success, but just wondering if somebody knows how to add a crossover alert to it, preferably including email and PUSH notifications. Just can't justify stare at the screen waiting for a signal to happen! Any and all help greatly appreciated!

See attached screenshot for example of how powerful this can be.

Notes on System as it relates to screenshot

1) correl8 indi shows USD strength rising above 0 line
2) correl8 indi shows XAU strength dipping below 0 line
3) Sell at open of new 4H candle with SL at high of previous candle
4) Exit trade when BOTH currency strength lines cross again at the 0 line.

Massive move caught here. Have compared the correl8 indi with countless others and it picks up these moves nicely and before many other indicators can. Definitely worthy of somebody adding in an alert function if possible.
Attachment

EDIT: PLEASE READ POST 47 for an update on how this indicator is going, the logic behind it and the evolving nature of how I am utilising it now that I am having it coded by an expert programmer to include the alert function. The initial logic I was using to make trading decisions is being refined and over the coming weeks I hope to introduce a great trading system with a fully functional and comprehensive alert system.

EDIT: 20 June 2016 - PLEASE READ POST 169 for a fully revised and updated strategy that I am now forward-testing.

EDIT: August 28 2016 - I am getting ready to unveil my latest strategy which incorporates a completely revised Correl8 indicator. The previous strategy at post 169, whilst still valid, has some shortcomings which the latest version seems to overcome. I am.excited to be sharing my latest developments with you all so stay tuned over the coming week when I hope to post everything i have available.

EDIT: October 11 2016 - Please refer to Post 365 for a fully revised and updated strategy with updated indicators / templates.
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Attached File(s)
File Type: ex4 correl8b.ex4   29 KB | 6,828 downloads
File Type: mq4 correl8b.mq4   17 KB | 9,014 downloads
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  • #2
  • Jun 4, 2016 4:58pm Jun 4, 2016 4:58pm
Another example on EURUSD 1Hourly TF.

It is important to look at the zero line crossing when the line is steep, as in this example. The more "lazy" crosses such as the confusion leading into this large move just highlight the noise and indecision in the market prior to the move.

This indicator is not going to pick up every move and there will be fakeouts which take out stop levels, so discretion is advised when placing stops etc.
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  • #3
  • Jun 4, 2016 5:06pm Jun 4, 2016 5:06pm
An example highlighting the importance of multiple TF analysis.

This works on all TFs, so a comparison using 5M and 15M, even the 1M can be beneficial when finding ideal entries.
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  • #4
  • Jun 4, 2016 8:26pm Jun 4, 2016 8:26pm
Hi and thanks for the indicator. Does this work only when the market is open?
  • #5
  • Jun 4, 2016 8:44pm Jun 4, 2016 8:44pm
Another example of a scalp trade on the 1M chart, using the correl8 1M and 5M signals.

If you are only ever looking for 10 pips a day, here is your trade. A nice separation on the 5M after the EUR is already showing weakness on the 1M just prior.

As target is only 10 pips, I did not wait until the next crossover...just as well, as there is quite a bit of noise immediately following this trade. 10 pips on the 1M is a nice outcome.\\In this example I placed my stop just above a swing high...a tight stop ensuring R:R of 1:2.

So you can see that scalpers can utilise this method also.
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  • #6
  • Edited 9:05pm Jun 4, 2016 8:49pm | Edited 9:05pm
Quoting bhanugopal
Hi and thanks for the indicator. Does this work only when the market is open?
No, the indi should work at any time.

I have found it a little buggy as when you first add it to the chart it only shows a certain amount of bars of data and then stops...a way around this is to scale out entirely to the smallest chart size, then double click on the indi in the Window and then just press OK, and you will see it extend indefinitely into the chart history. Then you just scale back up to where you like to usually view your chart size.

Apart from that, I just think it deserves an alert function added somehow.

Are you having any specific difficulty or has this answered your question?
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  • #7
  • Jun 4, 2016 9:04pm Jun 4, 2016 9:04pm
Not to try and confuse matters, as I like to keep this as simple as possible (for myself mainly!), but if I was to add another indicator for further confluence of direction then I like to look at the Synergy suite of indis, or "Synergy Pro"...available here on the Forex Factory Forum.

When combined with the correl8 5M TF, it eliminates most of the noise of the 1 minute chart for a nice 25 pip profit as shown here at the end of Friday's trading session.

Confluence here between the correl8 5M TF EUR crossing the 0 line (USD was already showing weakness, hovering below 0 line prior), and the Synergy Pro yellow signal line crossing above the 50 mid-point.

Profit taken again as both currencies crossed the 0 line and also at the same time as the Yellow Synergy Pro signal line crossed back under the 68 level from above.

25 pips profit with only a 5 pip SL.
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  • #8
  • Jun 4, 2016 9:06pm Jun 4, 2016 9:06pm
Could anybody program an EA to test the strategy please?
  • #9
  • Jun 4, 2016 10:02pm Jun 4, 2016 10:02pm
Quoting kirkleaforex
{quote} No, the indi should work at any time. I have found it a little buggy as when you first add it to the chart it only shows a certain amount of bars of data and then stops...a way around this is to scale out entirely to the smallest chart size, then double click on the indi in the Window and then just press OK, and you will see it extend indefinitely into the chart history. Then you just scale back up to where you like to usually view your chart size. Apart from that, I just think it deserves an alert function added somehow. Are you having...
Thanks for your reply. I tried what you suggested. It didn't work. So I applied it on another pair and it worked. But it doesn't work for GBP, JPY and NZD. It only shows a straight line for those currencies. I'm on Tallinex. I request you to post a screen shot of your settings. Thanks
  • #10
  • Jun 4, 2016 10:56pm Jun 4, 2016 10:56pm
Quoting bhanugopal
{quote} Thanks for your reply. I tried what you suggested. It didn't work. So I applied it on another pair and it worked. But it doesn't work for GBP, JPY and NZD. It only shows a straight line for those currencies. I'm on Tallinex. I request you to post a screen shot of your settings. Thanks
That's odd, I have tested all majors with my broker Pepperstone and all are allowing the extra data once I follow the procedure as mentioned above...see screenshots below.

I have looked through the code and can't see any option there to set minimum number of bars to a user-defined number...so perhaps this can be coded in by somebody also?

Also, the settings are shown in the screenshot below, but basically keep the "Auto" set to true and all individual currencies set to "false".

As far as the levels go, I delete all but the 0 line to make it easier visually as I am only interested in the 0 line being crossed by both as they diverge after the crossover. The other lines don't offer me anything useful but they are there for people to play with and suggest ideas if they see fit.
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  • #11
  • Jun 4, 2016 11:10pm Jun 4, 2016 11:10pm
Quoting B-Naire2B
Could anybody program an EA to test the strategy please?
I am unsure about an EA as I trade this manually...not all setups work and I use my discretion based on several factors, i.e. the steepness of the divergence at the crossover point, multiple TF analysis, occasional confluence using other indicators that I use and then remove etc, breakouts (trendline, S and R, flags and pennants etc).

I reckon there is too many variables to make an EA out of this, but a simple alert for all TF's should make it easy to identify possible setups at that moment and then you can choose to go the extra mile with your own indicators and judgement to eliminate bad trades.

Additionally, I don't believe that an EA is a silver bullet to everything, and will never replace human decision making...there are some good EA's out there, but they are far outweighed by ones that blow accounts. And I don't intend on offering hope to people where there is little to none on offer. Best stick to manually trading this system IMHO.
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  • #12
  • Jun 4, 2016 11:26pm Jun 4, 2016 11:26pm
One of the main reasons I like this indicator so much is that is offers a clear signal based on strength as individual currencies diverge, and also indicates the momentum and volatility of a move by showing the steepness of the line as it crosses the 0 mid line.

Check out this screenshot of a multiple TF trade on XAUUSD on Friday. If you are one who "Trades the Rainbow", then you will be seeking trading opportunities after the rainbow "flips", and here we have 2 opportunities based on whether you prefer a 5M signal, or wish to wait until a 15M signal for further confirmation.

The 1M chart has too much noise going on, but by following the 5M and /or 15M you avoid the noise and stay in the trade for a bigger pip gain.

Notice the 3rd vertical line; there has been no actual crossing of the 0 line on the 5M chart, so it is not time to exit...stick with it...even at the 4th vertical line...still no cross on the 5M.

Basically, it is up to you to find what works best for your trading style. If you already have a system you employ but need something extra to indicate currency strength and volatility, try this out!
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  • #13
  • Jun 4, 2016 11:41pm Jun 4, 2016 11:41pm
A few more "rainbow" trades.

The first one doesn't need to be examined so much, but notice the 2nd...the correl8 indi signal occurred way before the rainbow "flipped", offering an earlier signal.

The exit from the first trade was a personal decision based on price action and because the currency lines had already crossed each other (XAU still hadn't crossed the 0 line) and were obviously moving sharply away from each other.

Now I really need somebody who knows how to code to offer an alert for this - any takers? Preferably with email and Push notifications.
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  • #14
  • Jun 4, 2016 11:47pm Jun 4, 2016 11:47pm
very difficult to understand, where price to go
  • #15
  • Jun 5, 2016 12:12am Jun 5, 2016 12:12am
Quoting kirkleaforex
{quote} That's odd, I have tested all majors with my broker Pepperstone and all are allowing the extra data once I follow the procedure as mentioned above...see screenshots below. I have looked through the code and can't see any option there to set minimum number of bars to a user-defined number...so perhaps this can be coded in by somebody also? Also, the settings are shown in the screenshot below, but basically keep the "Auto" set to true and all individual currencies set to "false". As far as the levels go, I delete all but the 0 line to make...
I'll just wait for the markets to open. Unable to sort out the problem. The only currencies that seem to work now are AUD, EUR & USD. Tried everything that I know.
  • #16
  • Edited 1:34am Jun 5, 2016 1:09am | Edited 1:34am
Quoting crow
very difficult to understand, where price to go
Key is knowing what line represents what currency, i.e. in the XAUUSD chart, the yellow line is XAU overall strength, and the green line represents the USD overall strength. As each line diverges and crosses the 0 line in opposing directions, it offers buying or selling opportunities as it indicates one currency is strengthening as the other is weakening. These opportunities are easy to spot using this indicator. If the lines are steeply climbing / falling, the move is stronger and more volatile, and a betther trade to be taking.

In order to know which direction you need to trade, you just need to know which coloured line to follow.

Because the leading currency in XAUUSD is the XAU, and XAU is represented by the yellow line, you trade in the direction of the yellow line when they diverge and cross the 0 line.

Each currency is represented by a different colour...you just need to look at Window 2, top left corner to know what colour represents the leading currency and trade in that direction. The actual text is the same colour as the line it represents...i.e. EURUSD shows the EUR strength as the blue line, and the "EUR" is in blue text to make it obvious.

Take a close look at the following screenshots...all should become clearer hopefully.
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  • #17
  • Jun 5, 2016 1:20am Jun 5, 2016 1:20am
Just to be clear, I am trading this system on it's own without additional indicators mostly, but even if you already have a system that works for you, but you just need additional information about the potential strength and direction of a move, this could be a useful addition to your arsenal.
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  • #18
  • Jun 5, 2016 2:06am Jun 5, 2016 2:06am
This can even be used to identify possible reversals. See screenshot...

1) There is a strong weakening of the JPY and it crosses below 0 line sharply, however GBP is not strengthening, just wavering below the 0 line, suggesting indecision;

Both currencies cross above together and we see a flattening out of price action - more indecision;

2) A strong push up, however currencies cross each other well above 0 line and then travel down together below, then travel together up to around the 0 line where we see another cross at the 0 line itself. (We wouldn't trade a cross here as price action suggests a reversal as indicated by prior indecision).

3) From the cross well above the 0 line, to the cross AT the 0 line, we see a weakening of momentum, and then following is a strong trade signal confirming the reversal.
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  • #19
  • Jun 5, 2016 2:36am Jun 5, 2016 2:36am
Quoting bhanugopal
{quote} I'll just wait for the markets to open. Unable to sort out the problem. The only currencies that seem to work now are AUD, EUR & USD. Tried everything that I know.
OK good luck with it then...maybe open a demo with Pepperstone if you are keen to try it out and it doesn't work with your broker for whatever reason? At least that way you will get the signals and indi displayed correctly and can trade from them with your Broker.

Definitely worth demo'ing IMO.

I have been trading for nearly 10 years with mixed success and have made about every mistake there is to make; battled the psychology demons and so on, but this indicator and method seems so damn clear to me, I just have to share it with people in case they see it too. Best of luck tomorrow!
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  • #20
  • Jun 5, 2016 3:11am Jun 5, 2016 3:11am
Yes i got the same error.

It wasn't showing properly on the chart.

Probably it is a broker issue.

But will see when market opens.

Cheers.
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