Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

ok heres where I am today

500ma corrie on the right …dow on the left with a 80ma and 20ma in attendance

1) Dow futures (FXCM UK)is a little rangy so far but drifting into bearish….I really need more confirmed bias….breaching the 13,000 would be interesting ….see the arrow on left chart

2) if this happens I am looking for sells into the Yen and USD…they are already showing decent correlation for this with bull moves….thats good to see…

3) so who do we play as a sell ?……….well AUD and NZD are easy picks (bottom sells on right chart already) but thats off of the asian session where the other players are not active….

4) the GBP is Stong….but everything needs a breather and if it slides the % movement will be more lucrative than others possibly

so Im watching for Dow >13,000 and if that GBP breaches the line drawn (see arrow on right chart)….then I have to have a punt

thats the plan…..but I will take it as I see it….naturally expecting fireworks from the Euro today as well !

N

 

[NVP]

if people notice I am trying to use Facebook, linked in and Twitter now linked to my website......

Excuse the slips as i learn this .........

i am just trying to fight off all the junk being sent to me

no i dont want to connect to Peter Andres twitter page...what was his last decent trade anyway ?

https://twitter.com/#!/fxcorrelator1

N

 

[NVP]

hey all

GBP was taking to long to move so I took EURO sells off that dow fall and also i was hunting some fast Crude sells as well that looked interesting first thing

not bad at all so far !
N

 

[NVP]

yep yep gold shorts oblidged as well....I know !

 

[NVP]

hey all

See how individual currencies show support & resistance lines just like Pair charts ?
look at that GBP (red)…on a 500ma corrie......it stood on the Support line and then bounced …wow !

Boy that GBP dude is strong today….so dont try to fight it….as the game is to go with the flow of the market…

Hope you all realised way way back that the blue Euro was the sell…..!
and 10000% correlation there as Dow crumbled and we mopped up those USD and Yen buys …..!

if only all weeks started like this one…:smart:.

NVP

 

[NVP]

FREE Indicator

As requested heres the Free FXcorrelator again with the 8 currencies shown at the top

dont get tooo excited ......its not just about the indicator.....its what you do with it

(aint that the same in life )

N

https://twitter.com/#!/fxcorrelator1
http://www.facebook.com/fxcorrelator

 

[NVP]

With the French elections certainly not going to sarkozy's well laid plans

we are again back in the Soap opera world of the Euro....

its had a good Q1 but will it last ....?

Whats keeping it up ?

Frankly I dont care....I trade what I see .....if it goes up on my FXcorrelator charts I will buy it....... and if it dumps then on go my Euro shorts against whatever is going north on a roll.....(yes probably Yen and USD )

Frankly - I dont know what all the fuss is about .....the Euro is already a 3 time loser year on year and could easily be again in 2012

See this chart ....we are going back to 2008/9 and the collapse of the Dow (left chart)....then I popped on a high/low Band for the (blue) Euro from 2009 to date..........not exactly the buy of the century eh ?

in fact The Euro is the biggest loser during this period by far .....miles below the second place faller the USD (yes the USD is second and not the Yen ...)

so perhaps its just a matter of time and Q2 heralds another fall as the Europeans go out for a long lunch ...and dont come back to the office

hmmmm :smart:

N

 

[NVP]

I met Anna and David at the Recent Forex Expo in London.....

Very genuine people and all of Annas work is worth a look.....and Forex strengthmeters are integral to her Trading as well

heres an interesting take on the Gold USD relationship

I trade Gold and Crude as well.......but dont tend to shout about it here as it takes a back seat to my forex work.....

Personally I like to watch Golds performance against the whole G8 Forex Family.....then I can see if traders are really moving in or out of (fiat) paper money and i'm not just fixated on the USD ....

N

forex trading - dollar gold relationship - YouTube

 

[NVP]

hey all

This week I am sharing what I look at before London Session using my FXcorrelator forex strengthmeter and correlation approach…

Heres the chart…these lines on the right are where I have priced where those currencies SHOULD BE priced – based on a normal session using correlation and other economics

Aussie D had a bad bad night
JPY had great night and looks very strong this week
Euro is over-priced
GBP is one strong dude
USD Neutral

then what I do is look to trade to moves to see if the market corrects to these or continues the bias above

I have to watch my dow futures though as well…..I have it with 3 lines in presently as I need to see what it is doing next …

no predictions…..trade what you see gang……:smart:

N

https://twitter.com/#!/fxcorrelator1
Nvp Fxcorrelator | Facebook

 

[NVP]

Predictions are for football pundits and fortumes tellers ...

personally ?

I think a correction south in the Euro is overdue today and a falling dow will make it happen....looks like the Yen may be the partner to trade against as well...

But my main prediction yesterday was watching for a GBP correction and everything else happened bar that one ....!

so trade what You see

N

 

[NVP]

hey all

This week I am sharing what I look at before London Session using my FXcorrelator forex strengthmeter and correlation approach…

Heres the chart…these lines on the right are where I have priced where those currencies SHOULD BE priced – based on a normal session using correlation and other economics

Aussie D had a bad bad night
JPY had great night and looks very strong this week
Euro is over-priced
GBP is one strong dude
USD Neutral

then what I do is look to trade to moves to see if the market corrects to these or continues the bias above

I have to watch my dow futures though as well…..I have it with 3 lines in presently as I need to see what it is doing next …

no predictions…..trade what you see gang……:smart:

N

https://twitter.com/#!/fxcorrelator1
Nvp Fxcorrelator | Facebook

A marginally rising Dow has made the Yen correct to truer value in last hour or so .....and it is handing AUD a little lifeline to climb back to "True value"

I cannot expect Euro and GBP to correct south off a rising Dow...


N

 

[NVP]

some one has asked me about Mean Reversion strategies ...

let me come back on that one at some time dudes

There are times when I look for reversions to mean (a little like my thoughts above on the 1 hours) and also times when I am agressively looking for deviation to mean (trends)

both work - the main thing is you need to have 1,000,000% clarity in the timeframe / market and settings you are working on

thats going back to my Triple Trinity comments about market/System/Trader

http://www.trade2win.com/boards/for...-basic-ideas-strategies-1079.html#post1835238

when to use this stuff is all in the Trader's zone..... selecting what system to use and when........in truth In my "Trader" area - I am still far too much a subjective trader at the moment.....sure the simple confirming MA's I teach in my sites is fine and chuggs along well......but I need to crystallise more about my market analysis approach on the higher Ma's and why I select certain strategies at certain times..........

N

 

[NVP]

As people know i am a big fan of Cap's 3 ducks system

heres an FXcorrelator on 2 charts

left = 4hr TF 60ma
right = 1hr TF 60ma
(I havent botherd to show a 5min - the 3rd duck)

look at the GBP........untouchable on the 4hr as king currency and still battling them all on the 1 hour as well

Certainly THE currency to watch today and buying against other Currencies :smart:

looks like the Turquoise NZD and Orange AUD are the fall guys currently....but I
am not necessarily telling you to sell them against the GBP.....you need to be plugged into Cap and his thread here at T2W to learn all the ropes


N

 

[NVP]

hey all

like a few others here on T2W I do try to keep the junk down to a minimum...

we are just trying to keep the forex wild west a little more safe for Newbies

for any newbies that look at trading please please please remember this is one of the most targeted industries in the world for junk mail , marketeers, and people claiming to make you a fortune in return for paying them for their secrets

do me a favour newbies...sit on your wallets for 6 months before you lay a penny down in training or systems...and research research research first ! :smart:

you just might save a few quid !


Http://www.trade2win.com/boards/forex-news-analysis/147842-signals-buygoodsignals-5.html#post1836814

 

[NVP]

GBP coming under pressure now even off a rising Dow.......
hmmmmmmmmm
N

 

[NVP]

The Euro cracks me up......indestructable !

 

[Scouser76]

Hi,

Sorry if this is a dumb question, but it’s been bugging me for a while. I’ve read a lot of this thread but can’t seem to find an obvious answer to it.

If someone takes a directional view on correlation, i.e. believes it’s going to increase or decrease, how can he/she profit from that view in the spot market? Is there a position or combination of positions to take?

For example, if I think the correlation between EUR/USD and GBP/USD is likely to INCREASE, what can I do to capitalise on that opinion? Doesn’t the correlation just mean how often an increase/decrease in one rate corresponds to an increase/decrease in the other?

It doesn’t say anything about the relative increase in each pair. So if I long one and short the other (take a position in EUR/GBP), I could lose out depending on how MUCH EUR/USD changed relative to GBP/USD, even if the correlations did in fact increase. Same if I go long both pairs or short them both.

Does this make sense? Is there a way to profit from changes in correlation?

Great thread by the way.

 

[NVP]

hey there

well a good day yesterday for the Dow as it swept back North and eventually breached the lines i placed yesterday (See left chart in picture)

This took our Dynamic Duo the USD and Yen south for some nice trading opportunities ….including the AUD buys later in the day

overnight we see some Dow hesitation and we need some more definitive bias now for me to call the days action ….

for me that Red GBP line is still there and holding….although GBP never really improved yesterday off of Strong Dow support so i’m really hopeful this week of some sharp selloffs at some point…today may deliver with Economic news due

Good trading:smart:
N

 

[NVP]

Hi,

Sorry if this is a dumb question, but it’s been bugging me for a while. I’ve read a lot of this thread but can’t seem to find an obvious answer to it.

If someone takes a directional view on correlation, i.e. believes it’s going to increase or decrease, how can he/she profit from that view in the spot market? Is there a position or combination of positions to take?

For example, if I think the correlation between EUR/USD and GBP/USD is likely to INCREASE, what can I do to capitalise on that opinion? Doesn’t the correlation just mean how often an increase/decrease in one rate corresponds to an increase/decrease in the other?

It doesn’t say anything about the relative increase in each pair. So if I long one and short the other (take a position in EUR/GBP), I could lose out depending on how MUCH EUR/USD changed relative to GBP/USD, even if the correlations did in fact increase. Same if I go long both pairs or short them both.

Does this make sense? Is there a way to profit from changes in correlation?

Great thread by the way.

Hey S

Good question ..

let me come back later as tied up at the moment....

also have a look through my Website (click on the trainer/coach button below my avatar) as I have a few things there that explain what correlation is

http://fxcorrelator.com/corrie2/

N

 

[NVP]

http://www.trade2win.com/boards/for...-basic-ideas-strategies-1082.html#post1837260


jees ................GBP gone