Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

hey all

long day coming so i'm in work early

heres the 500ma on the 1hr TF

Red GBP took some hits yesterday......

but I am still stalking the Yen and awaiting a Dow fall ..............hmmmm

may be a while before my next post due to work and some travelling
tomorrow

jedster and others are always around to answer your questions ......

later :smart:
N

 

[elisab]

Another correlation that is running out; the Sek is weak and the Nasdaq is strong: who is lying ?

 

[robertofx]

Another correlation that is running out; the Sek is weak and the Nasdaq is strong: who is lying ?

Are you using overlay charts ?

 

[elisab]

Are you using overlay charts ?

Yes, with EURSEK of reverse scale for an easier graphic reading.

 

[perox]

Yes, with EURSEK of reverse scale for an easier graphic reading.

Hello Elisab,

Do you use any indicator for this ? If so can you share it with me


Thanks
Perox

 

[elisab]

Hello Elisab,

Do you use any indicator for this ? If so can you share it with me


Thanks
Perox

No, I do not use any particular indicator (just the correlation one). I simply overlap the two indices with EurSek on a reverse scale.

 

[danjuma]

Quick question please NVP if I may ask.

If I want to use your FXCorrelator_8020 indicator on daily charts, what chart period should I select for the US30 (because your accompanying pdf states open US30 on a H1 chart...), and also which SMA (will a 20 period SMA as suggested for a H1 chart in the pdf be appropriate for a daily chart)? Many thanks.

 

[Jedster2001]

Quick question please NVP if I may ask.

If I want to use your FXCorrelator_8020 indicator on daily charts, what chart period should I select for the US30 (because your accompanying pdf states open US30 on a H1 chart...), and also which SMA (will a 20 period SMA as suggested for a H1 chart in the pdf be appropriate for a daily chart)? Many thanks.

NVP is drinking Pina Coladas at the side of a pool right now :drunk:
Well, actually, right now he is probably recovering from the Pina Coladas he drank last night
Anyway, I'll chirp in while he is not here...

It depends on what you are trying to do. A 20 period MA and correlator is perfectly valid on most time frames. It captures the most recent price action. However, if you want "the same" time period as you move up and down the time frames then you will have to adjust the periods, and that can't be done with the 20 MA from a 1H chart because it is too small.
For example, if you have a 20 period MA on the daily chart, that is the same as a 120 period MA on the 4H chart, and a 480 period MA on the 1H chart.

So, you will need to use the period that suits what you are looking for. 20MA is good for the shorter term, but for the longer term, you might up it to say, 50 or 80.

J

 

[danjuma]

NVP is drinking Pina Coladas at the side of a pool right now :drunk:
Well, actually, right now he is probably recovering from the Pina Coladas he drank last night
Anyway, I'll chirp in while he is not here...

It depends on what you are trying to do. A 20 period MA and correlator is perfectly valid on most time frames. It captures the most recent price action. However, if you want "the same" time period as you move up and down the time frames then you will have to adjust the periods, and that can't be done with the 20 MA from a 1H chart because it is too small.
For example, if you have a 20 period MA on the daily chart, that is the same as a 120 period MA on the 4H chart, and a 480 period MA on the 1H chart.

So, you will need to use the period that suits what you are looking for. 20MA is good for the shorter term, but for the longer term, you might up it to say, 50 or 80.

J

Jedster2001, thank you for your response; much appreciated. What I am trying to do is trade off D1 charts using price action, but planning to use the FX Corr as additional confirmation. I would not say I trade long term, as I will usually open and close the trade the same day, or sometimes next day. So will the 20 period MA be Ok? The other question I still need an answer to is which chart period of the US30 should I use - daily chart? Thanks

 

[Jedster2001]

Jedster2001, thank you for your response; much appreciated. What I am trying to do is trade off D1 charts using price action, but planning to use the FX Corr as additional confirmation. I would not say I trade long term, as I will usually open and close the trade the same day, or sometimes next day. So will the 20 period MA be Ok? The other question I still need an answer to is which chart period of the US30 should I use - daily chart? Thanks

I would have thought, if you are trading off the daily charts, then you should also have the dow on the daily chart. However, you said that you are looking to hold the trades for just a few hours, or maybe a day or so, so I am not really sure what you are using to decide your entries, targets and stops. What sort of strategy are you thinking of?

Normally, when trading off the daily charts, the stops and targets are considerably bigger, since candle sizes are equally bigger. The trades then more commonly run for a few days/weeks.

J

 

[danjuma]

I would have thought, if you are trading off the daily charts, then you should also have the dow on the daily chart. However, you said that you are looking to hold the trades for just a few hours, or maybe a day or so, so I am not really sure what you are using to decide your entries, targets and stops. What sort of strategy are you thinking of?

Normally, when trading off the daily charts, the stops and targets are considerably bigger, since candle sizes are equally bigger. The trades then more commonly run for a few days/weeks.

J

Hi J,

Thanks for your reply. I am most grateful. Anyway, a quick look of the FX Corr in conjunction with my PA method seems to be in conflict with each other instead of complementing each order (i.e. when my method is telling me to buy, the FX Corr is telling me to sell). So, I will leave the FX Corr for now. Might come back to it again in the future. Thanks

 

[NVP]

hey all

Good to see discussion still going on ....thanks J

ok... my laptop went "on holiday" as soon as i arrived here in the canaries....and it is very poorly !

I will be back online monday dudes ........

take it easy
N

 

[NVP]

mornin all......

i'm around again now.......and catching up so please be patient with me .....

ok we see in the last 10 day the Dow got bigger....and it seems yen is unstoppable on a big rise

N

 

[NVP]

Hi J,

Thanks for your reply. I am most grateful. Anyway, a quick look of the FX Corr in conjunction with my PA method seems to be in conflict with each other instead of complementing each order (i.e. when my method is telling me to buy, the FX Corr is telling me to sell). So, I will leave the FX Corr for now. Might come back to it again in the future. Thanks

hey D (and everyone .....)

just a thought ...........use a 500ma delta 1 setting on the FXCorrelator if you want to see PA activity........it may help instead of trying to apply more MA based schemes alongside any PA strategies

N :smart:

 

[NVP]

hey all

BH in UK today ........

heres the stanard sharts

4hr on a 20/3 ma
1hr on a 20/1 ma

Dow in attendance on both on a 20 sma


thoughts

Yen has spent a lot of time recently in the North
Dow (and indeed US inc.) has been excellent....but we need to see what happens next .....

at this very moment (1hr) we see the dow looking to perhaps bounce south off of the recent resistance level and I see the USD and Yen actually shared the same airspace below the Zero in last few hours.........finally !

In the absence of any driving economic news I would look to see if we can get them together again
on the same side and preferably supported by some (inverse) action on the Dow

drop to 15m or even 5m as well if this helps..but moves are faster and you need to be seriously reducing any pip targets on the moves

N

 

[NVP]

abysmal monday volatility on lower TF's .........ZZZZZZ

 

[NVP]

hey all

from below....do you see what I mean re yesterdays lowww volatility ?

then all hell broke loose ........yen was the sell......

and is that Swissie starting to get back to its old ways ?........:whistling

later
N

 

[NVP]

Dows strength getting the USD and Yen south now .....

nice !
N

 

[NVP]

well the move was big for usd and Yen ...........but it was against the Dows rise so my standard correlation rules were a little screwed there...

Confession ?.......I tend not to worry too much about Dows correlation these days ....i've found more interesting patterns over the years

later
N

 

[Jedster2001]

Hi NVP,

Glad to see you back. I was surprised to see you trying to take some pips yesterday. Given the bank holidays, the markets moved about | | this much, which made it, um, testy at times and just plain dull for the rest...

Still, you've come back and woken up the markets, so well done for that... :clap:

I knew you missed this forum. I bet you couldn't wait to get back

Anyway, welcome back to your thread...

J