Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

gotta scoot..........later !

 

[NVP]

2 words today – YEN POWER !

in my own approach to Trading I use strengthmeters to gauge the power and direction of individual currencies and I also use the Dow to represent Global Equities and their influence / relationships with the Forex major currencies

and its not rocket science

also for me its not just what certain currencies are doing in line with my perfect correlation models …..(Dow up – Yen and Usd down and vice versa)its also when they DONT do that when I can really take advantage and make good profitable trading decisions

Look at the Dow and Yen (yellow) lines below on 1 hour charts
now in hindsight we all know the Yen is strong over last few days but did you realise how strong this move is ?

the arrows are the clue for me …….look at the Dow pushes north over last few days …..and look at the relative response of the Yen in falling ….Falling ?

yep thats the key ….when I saw the limited falls of the Yen in what should be something much much more in normal correlation conditions terms I have 2 choices :-

1) Realise a correction will come and trade the reversion to mean
2) pounce on the continued strength

yesterday I went on 2)…..today ?….Who knows !

have a good day all :smart:
N

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

 

[NVP]

Yen finally coming under a little pressure.......is this finally time for a little mean reversion for a Yen currency thats way "overpriced" for more normal Market correlation / conditions ?

the Dow piling north this afternoon will be good for this ...:smart:

N

 

[NVP]

hey all

sure I could spin a line and tell you now all my correlation calculations indicated the yens fall and I am selling yen and making losts of pips......blah blah

but have to say i'm not that comfortable with current action no matter how volatile the market is

so not doing much.....I want volatility combined with nice steady correlation of Yen & USD & Dow

and at the moment it is a little Chaotic in my books

N

 

[RandyG67]

NVP-

I was looking over your method and your Correlation indicator with an eye toward position trading the 1 Hour or 4 Hour charts. For instance, right now it looks like a good idea to begin building shorts in GBP/AUD, GBP/NZD and/or entering long AUD/JPY (4 Hour charts with PerAvg set to 200). Basically playing the crosses whose currencies are at the extreme of one another.

It seems to pass the eyeball test. Have you, or anyone else, tried this?

Thanks for all that you've shared,
Randy

 

[NVP]

hey all - lets talk the year so far ……

Dow (left chart)…..up by nearly 7% so far


Yen (right chart yellow)….big fall of approx 5% in relative terms to other currencies overall…so actually in the grander scheme of things the recent strength is small beer and its correlating inversely well with the Dow….which we like !

USD (right chart green)…..Falls ?…..nope resiliently Flat …so very strong in correlation terms…reflecting the good US Economics seen so far for 2012….sadly not as bearish as I would hope for my correlation plays…but the Yen made up for it ….big time !

The Rest ?

GBP(red) +6%, CAD (Brown)+% and Euro(blue) +% ……….GBP was Strong off of the bullish Dow.. and assisted by nice contributions from other less successful currencies (Zero sum game)…makes you wonder what the Euro would do if they ever all agreed on something (!?)

AUSSIE D (orange)….. disastrous…with similar 5% falls like the Yen but overdue…all of the money went to GBP and CAD

others all boring and flat

Predictions ?

c’mon……you know I stay on the fence 24/7

trade what you see !

good trading
N

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

 

[NVP]

NVP-

I was looking over your method and your Correlation indicator with an eye toward position trading the 1 Hour or 4 Hour charts. For instance, right now it looks like a good idea to begin building shorts in GBP/AUD, GBP/NZD and/or entering long AUD/JPY (4 Hour charts with PerAvg set to 200). Basically playing the crosses whose currencies are at the extreme of one another.

It seems to pass the eyeball test. Have you, or anyone else, tried this?

Thanks for all that you've shared,
Randy

hey Randy............

Me ?...Strengthmeters ?.....I have tried seemingly endless amounts of ideas and approaches with plenty more out there as I think of them or find them ...

let me come back later :smart:
N

 

[NVP]

really tied up today.........bugger

and look at the mornings action .....perfect correlation.....double bugger !

E/U and E/J sales were the big winners.....

N

 

[NVP]

heres the Daily............

so what happens next on the Yen ?

and bear in mind the Dow has been relatively net bullish since Jan....and that should have easily assisted in keeping Yen below that line .....

perhaps if the USD starts rising as well then the BoJ may let the move ride up......as thats their primary pair worry I suspect....but USD (Green) is as flat as a pancake on this chart !


hmmmm:smart:
N

 

[NVP]

jees that story is gonna unfold fast if yen keeps flying today.......

 

[NVP]

NVP-

I was looking over your method and your Correlation indicator with an eye toward position trading the 1 Hour or 4 Hour charts. For instance, right now it looks like a good idea to begin building shorts in GBP/AUD, GBP/NZD and/or entering long AUD/JPY (4 Hour charts with PerAvg set to 200). Basically playing the crosses whose currencies are at the extreme of one another.

It seems to pass the eyeball test. Have you, or anyone else, tried this?

Thanks for all that you've shared,
Randy

Hey Randy..........if you like what you see then test it a little and go for it

I have talked convergence a few times on this thread....heres the start of my last discussions....it then goes on and on inbetween the other usual blurb and wittering....

or just search for "convergence" in posts and cherry pick

http://www.trade2win.com/boards/for...g-basic-ideas-strategies-765.html#post1437512

 

[NVP]

jees...........if the Dow bounces i'd be very tempted to sell USD ....with pair currency to show itself as yet

N

 

[NVP]

I see the session eventually went as I was hoping yesterday ....but still only 20-30 pips on the table even on the A/U move

anyway thats trading

N

 

[NVP]

Black swan gang.....correlation.......

Market correlation questions: what is the primary driver here?

I understand the need to show paircharts for all you non believers of
the corrie innocent

but if you are talking correlation then you need to be observing individual currencies on the FXcorrelator ...and not these 50% blended paircharts

you can never see the seperate and more obvious dynamics and personalities that are revealed when you strip them down alone ! :smart:

N

 

[NVP]

today ?

I see 2 lines..........now watch them like hawks today as
breaches will revela a lot about the current market

N :smart:

 

[NVP]

15m TF......volalility alert ....trades imminent

 

[NVP]

warming up nicely......

 

[NVP]

je ne comprende....ou eh le sales on USD and Yen ?

 

[NVP]

more correlation topics.....must be a slow day everywhere

so c'mon .....tell me if this any logic or legs at all

N

 

[NVP]

jees the 15m volatility is flying .....looks like a buy USD scenario but would prefer Yen traveling with it ....they are looking strong as per my appalling French post earlier

N