Correlation Trading - Basic Ideas and Strategies

This is a discussion on Correlation Trading - Basic Ideas and Strategies within the Forex forums, part of the Markets category; Ref earlier thread and my 1 hour tip (a Bad one ?) just like comedy the secret to Trading is.....................Timing ...

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Old Aug 27, 2009, 5:11pm   #17
NVP
 
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Timing is all in this game........

NVP started this thread Ref earlier thread and my 1 hour tip (a Bad one ?)

just like comedy the secret to Trading is.....................Timing

Neil
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Old Aug 27, 2009, 6:18pm   #18
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is it time yet ?

NVP started this thread back again.........perhaps the Yen will hold on the 5min now at the resistance point shown and start moving up again with its tag team partner (USD) ?

GBP on 5min has started falling in line with the 1 hour TF.....or is it just a small retrace and it will continue upwards..............

hmmm...AussieD (Gold colour) is getting frisky on 5 and 1h Charts....and it appears to be moving opposite to the USD/Yen now on the 5min (per my rules)...so perhaps thats a buy signal ?

Dowgone this trading stuff is hard !

Neil
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Old Aug 27, 2009, 6:31pm   #19
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go baby go !

NVP started this thread thought i'd add a proper chart (Finally !) to show what is happening in the real world you are all probably more used to.........me I like the FXcorrelator world m'self....

GBPJPY trades should carry a goverment health warning - but this is for demonstration purposes only and they move reeeeeal nice !

Go baby Go !

have to go out now....more tomorrow....
Neil
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Old Aug 27, 2009, 7:39pm   #20
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Carol Alexander for cointegration apparently good, my PhD firend is in love with the author
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Old Aug 27, 2009, 10:12pm   #21
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NVP started this thread thanks shatztrader...i'll have a look

Neil
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Old Aug 28, 2009, 7:03am   #22
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cointegration Trading....

NVP started this thread Hi Shatztrader

just had a quick look this morning at Carol alexanders work and this is indeed very interesting........also brings home to me a little that trying to generate a lot of interest in this whole subject could be like pushing certain substances uphill

the thing is (as Ingot54 alluded to in an earlier Post)........understanding correlations and the methods of measuring/reproducing these graphically in a meaningful way is a key weapon in sucessful Trading - ignore it at your peril

I recognise my postings have been a little folksy to date and some people are probably thinking I am not showing enough respect to established Statistical/Scientifc methods in this area................but the truth is I am not a statisician and I would love to bring a balance here to this thread between the Science of correlation techniques verses the brutal practicalities of sucessful Trading

people on this site want profitable/workable trading sIdeas and systems and I want to bring some to the table !

c'mon all - please bring some thoughts to the table.......even if its denegrating my efforts to date and my (flawed?) indicator

Neil
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Old Aug 28, 2009, 7:07am   #23
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trial the indicator....?

NVP started this thread Hi (damn late for work now!)

It would be great if someone started using the indicator attached in earlier threads and fedback comments thoughts through this thread..........after about a year of playing with this I still have only achieved 25% of what this baby can do

c'mon you Metatrader fans !

Neil
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Old Aug 28, 2009, 7:57am   #24
 
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Correlation and Arbitrage

Quote:
Originally Posted by NVP View Post
Hi (damn late for work now!)

It would be great if someone started using the indicator attached in earlier threads and fedback comments thoughts through this thread..........after about a year of playing with this I still have only achieved 25% of what this baby can do

c'mon you Metatrader fans !

Neil
Hi Neil - I have followed every post.

I know about correlation, but apart from knowing not to trade against other positions, or in the same direction as other positions already open, I was wondering what else Correlation could be useful for.

I had a look at the pair that I posted (USDCHF and EURUSD) and I noticed something really interesting. At first I thought that the 2 pairs mirrored each other exactly. Mostly they do ... but there are times when there is a delay between when one pair makes a move, and the other moves in the opposite way.

It seems to me that this almost a licence to print money.

If you are quick enough, you can get SHORT the EURUSD if it has not moved when the USDCHF has suddenly gone LONG. Historically the pairs mirror each other, but this arbitrage occurs from time to time, and if you did little else than wait for it, you could do well I think.

I am certain there are people trading this already - there would probably be people who have already posted a method for it. If so, could someone please provide links. It's interesting.

In the chart(s) below, I have shown some subtle differences in the WEEKLY charts.

I think when looking at these divergances on the 1H TF, the opportunity must surely pop out at you n'est ce pas?
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