Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

mornin all

after 2 weeks of solid selling on the dow I have been targeting buys on the USD and /or Yen (if above the Zero)

on the left chart we now have them both below the Zero so sells now becomes the overiding strategy until further notice

aside from the Yen and USD actiopn ......NZD and GBP have proved best buys in last 2 weeks and the Swissie has been a dog

later :smart:
N

 

[NVP]

Mornin all ......

3 charts left to right

1) the 20ma/Delta 1 daily ......
2) the 1ma xmen chart on a weekly
3) GBPJPY - 300 pips in the Week

Follow the Free rules below in my signature area on any timeframe.

I am personally now focused on higher TF's as I research the Broader Markets and start to build a Investment Porfolio for the future.....

its very interesting so far ....I'm a member of about 4 groups now and learnong as much as I can about portfolio theory , ETF's, OEICs , Hedge funds , Absolute returns, deciles , Quartiles , and the thousands of Products out there seeking you all alpha....all markets

hmmmmm.....and I thought it was just the forex game that was was full of B*llSh*t.....


NVP

 

[NVP]

its interesting - for all you guys out there cutting your teeth on Forex trading you couldnt go to a better school if you decide to brancha out a little

in Forex Trading you really do sink or swim very quickly ......so dont get to upset if you are still struggling at this time ........you are playing in the premier league and the experiences will serve you well in other ventures I promise

N

 

[NVP]

does anyone follow the Cap and his 3 ducks system ?

its very very interesting and the FXcorrelator is perfect for showing its power

here Andy's highest TF 4hr on his 60ma setting (check out his thread for the other settings)

this week we saw lots of buying Opportunities against the USD which was in line with what I was saying later in the week on my daily TF - when USD and YEN finally got below the Zero line on the 20ma.....My Daily TF will be slower to react than a 4hr naturally (even on a 20ma setting)

the 3 ducks is a great system and perfect for teaching people about how to use MA's and Andy is a very very good trader

Respect
N

 

[NVP]

hey everyone

hope the week was not too painfull on the trading side........

as discussed - i'm stepping back a little to higher TF's at the moment whilst I spend more time looking at some longer term pension and investment strategies.....sleeping:ZZZZ)

anyway i've now been lucky enough to have been a few times around the block ......since my childhood in the 60's & 70's immersed in Gambling, that went into my teens....and then involved in Trading during the 80's and 90s to some more serious focus since the early 2000's in Forex its certainly been a ride !

the one Thing I would say to people starting out is recognise that its a long journey to your own particular trading style....so prepare for the ride and dont get to tangled up along the way

if you truly believe you are destined to be a sucessful trader you will achieve it I promise ......but just let it flow and remmeber there will be a lot of knocks and (life) diversions along the path....

so dont blow all the stake money in the process ....and when you do trade real money (and that day will come - too soon for most beginners sadly) then use chump change as I can assure you you will lose plenty on the way to your own personal holy Grail

lecture over ..carry on ! :smart:
N

 

[NVP]

one of the things I will say though is that whilst you battle along with developing your trading personality and your system and your own journey the market is waiting for you .....

patiently waiting for you.........as its not fair for it to kick you all over the place until you are ready with your system and your experience and your head ready for battle ......

is it ?........

so when you are (finally) ready you will hopefully realise getting to the point of readiness is when the true Combat begins !

and if you have a half decent system you will realise that the market only comes out to play and offers profits a relatively small % of the time ........the rest of the time it plays with you - decimating your hard earnt wins with false signals and whipsaw action....

So make sure you have a system smart enough to recognise this :smart:

NOTE

if its any compensation for anyone who got a little creamed yesterday ...

in my own bespoke Forex systems I persnally use (derivatives of the Free system I offer here) there were really just about 4 tradable Bars on the 1 hour TF chart .......(yes under 20% of the time was potentially tradable)

so dont get too upset if you were not rolling in pips yesterday !

(Note) - Thursday 1hr TF for me had 10 bars tradeable - so a very good day .......thats nearly 50% of the day was delivering profitable bar signals for me if I had chosen to Trade.......much better odds !

Have a great weekend ........and dont let those nasty markets get you down .........its nothing personal ...just business ! :smart:

N

 

[mike.]

Hope you still find the time to keep the thread going Neil, Your input is much appreciated,

I'm slowly getting to grips with the correlator and think its a wicked little tool.

 

[NVP]

Hope you still find the time to keep the thread going Neil, Your input is much appreciated,

I'm slowly getting to grips with the correlator and think its a wicked little tool.

hey Mike

glad you like it ...........using strengthmeters in the forex market is essential and the best tool you will ever have ...

why ?

Because it tells you what direction and strength currencies are moving .......how important is that ?

100000% important ............so welcome to the real game !

hey - i'm always around .......and in truth the more I read about investment strategies and funds and fund managers performances I will always keep Forex Trading in the mix as I am comfortable and I understand it - warts and all

looks like a lot of Absolute return portfolios could do with more Forex in the mix as it is truly a Zero sum option and just what they need when the equities start sliding and they have nothing else to go to........:smart:

N

 

[NVP]

hey all

ok here the daily and weekly charts ....20ma daily on the left - 1ma on the right showing ABSOLUTE moves on a weekly basis

on the left chart I am in USD and YEN sells until further notice ...Ignore Dow being south of 20 sma (and therefore signalling USD and or Yen buys) .......they are both south of Zero so that overules every other signal ......

the GBP followed by AUD and NZD (risers) are the main beneficiaries at present

on the weekly the Dow is falling now .........and we've had the GBP in the top half of the zero for 3 weeks running ......

check out your 1ma setting on any TF and tell me the % times a currency hits 4 from 4 on the same side ......

answer....less than 5% of the time........

but then again technically isnt the % chance of the GBP hitting a positive return this week 50% ?.................

because the markets are random .....right ?

later
N

 

[NVP]

Hint - If I was taking bets I would comfortably take millions against the GBP being positive this week and the strongest performing currency

them odds are nicely in the percentages of percentages......

N

 

[NVP]

mornin all

well the Dow stil getting hit .......from chart below inevitably this must get the USD and or YEN firing to come north and they are on the right side weekly chart on a 1ma .....thats pure move in the week from sunday night and you see the yellow and Green X men above the Zero now.....

on the left chart (20ma setting daily)....we see them starting to fire up to come North .....

I cant tell the market what to do.....and neither can you ....

all you can do is get a Trading system to replicate the market conditions and then generate signals where you consider the potential to make some pips where an extended move will occur.....

My FXCorrelator tells me this ........using the multiude of settings and combinations I have developed over the years ...I like it and I trust it .......but it still can only show me the market dynamics 24/7 .....

it cannot force the market to move and payout like an ATM machine ......!! ..nothing can sadly despite what those nice system vendors and experts tell you.......


thats it .....welcome to trading !

N

 

[NVP]

hey all

sorry i'm pretty tied up at the moment ....i'm hoping to have some time at the weekend to catch up on things

N

 

[NVP]

Hey all

No offence to the trader here ........he certainly seems to know his stuff it seems ....and can talk with the best of them.....more than me even ......respect !

But this is what makes me crack up about Trading and Training and Experts and this business in general......

prices go up ......prices go down .........thats it !

buy when they go up , Sell when they go down.......the rest is detail

ZZZZZZZZ

Forex: Dollar Rebound and Dow Plunge Suggest Trend Development - YouTube

 

[NVP]

morning all

well the Dow has kept BELOW the 20 sma and when USD went north of the Zero earlier this week then you have to buy it and tighten any Yen sells in play

(see my Free FXCorrelator system rules and links in the Signature area below )

wow.......GBP is in the buy zone again this week (right weekly chart on a 1 ma )........thats 4 from 4 !

it wont win the weeks race to the top though so my money is safe (see comments earlier this week)
looks like the Grey swissie and Blue Euro are neck and neck on that race !

Bad week for the Turquoise NZD that got buried so far

N

 

[NVP]

to anyone new here just remember :smart:

these systems are just meant as an introduction to Forex strengthmeters (my FXcorrelator) and some very mild inter market correlation analysis.....

they are powerful and i have been using this approach for over 10 years in the market .....

but experiment , and try them and adapt them to your own settings, timeframes combinations etc etc ...

I do not use these settings in my own bespoke trading systems these days ......sure the 20ma system alongside Dow correlation is a nice robust approach but I do use much more sophisticated systems these days thanks to the support of some very very good traders and programmers who have helped me over the years

but the principle is always there................forex strengthmeters show you the market dynamics .......and there is NOTHING ELSE comes close !

remember if you are watching and trading EurUsd 24/7 how much of the time do you really think that pair is delivering the most volatility and trend and the best chance of making those precious pips you need to stay profitable ? ...........

look at the small trading GAP between them this week vs the other BIG trades that were available in the picture below.....sure the blue Euro is very very strong this week alongside the grey CHF..... but so is the green USD .......you needed to be selling the turquoise NZD to make bucks this week so far !

wake up, smell the coffee then start watching the whole market ................

the FXCorrelator brings currencies to life !..............:smart:

N

 

[NVP]

lower tframes ....

the Euro has been superb for the last half an hour.......shame we havnt been able to really sell the USD or Yen into it as they are not really south on lower TF's either

EURNZD...................thats been the buy ........... cr*p spreads on that one !

(so i normally just buy EURUSD and SELL NZDUSD if thats easier )

N

 

[NVP]

GBP is firing up again north as well...................just a hint
N

 

[NVP]

NZD still the sell ....all the way

 

[NVP]

later ...

 

[lechatchat]

Questions about correlation majors with Dow and Nasdaq

Hi Nvp, hi folk,

I would like to share some observations with you as well as some questioning.
Nvp, I have some questions for you (and if someone else has any inspiring answers, you are welcome...).

I have been experimenting with FX corr strengh meter related to the the correlation of the main pairs with the Dow for some month now and tried to incorporate this system to my own system.

Basically, I am almost exclusively working on M1 Time Frame.

I have been observing some very interesting things, that I do not manage to understand at the moment, hence I am asking here to you Nvp, as well as to the others, what you think about all this.

I have been playing around with the MA settings 20, 80 and 200.
I have been observing the correlation between the Down and Nasdaq from one side with EURUSD, USDCHF, EURJPY, and USDJPY from the other side.

As we all know the triangle EURUSD, EURJPY and USDJPY has to be observed closely and as a whole to determine which pair will move the most and in which direction. Also, USDCHF is used to precise, confirm or sometimes give head up on EURUSD movements, sometimes in EURJPY.

(So I am now talking only about M1 time frame)
With all this in mind, I looked at how the Dow and Nasdaq moved compared to these pairs, when they cross the 80MA, the 200MA ad when do the bounce on it.
What I have been observing is that most of the time, the Dow or Nasdaq move before the currency pairs.
1) So here is my first question: how is it that the indexes move before the currency pairs? I am thinking that we need to purchase currencies (USD), to then be able to buy these index. It maybe be more logical on the sell side of the index: we get some cash when we sell them.

I will be glade if somebody could give me an explaination to that.

Well that is not the core of my questioning.

I have been observing that most of the time the movments, I mean the legs of the swings and breakouts, happen just first on the indexes, and the currencies follow.
There is 3 differents possibilities:
a- positive correlation
b- negative correlation
c- no correlation.
I have been observing that for most of the time it is either a- or b-, either a clear positive correlation either a clear negative correlation.

So, for most of the time, the indexes moves, then at least one or two of these 4 pairs (EURUSD, USDCHF, EURJPY, and USDJPY) move and the correlation if either positive or negative.

Now what I really thought was incredible is the following exemple:
EURJPY start moving in the same direction as the indexes with a little lag. The indexes break down the 80MA. EURJPY follow with a little lag. then the indexes reach a low, start moving up again. EURJPY follow with a little lag. The indexes bounce on the 80MA and head south again. EURJPY follow with a little lag, also bounce on its 80MA and head south afterwards. Now the same pattern occurs again, new low for the indexes, they bounce again on the 80MA, and head south. But this time, EURJPY cross its 80MA up instead of bouncing down like the indexes. And from now on, the indexes and EURJPY are going to be perfectly negativly correlated for next 1h30. It means, when the indexes are going to make a new low, EURJPY is going to make a new high. When the indexes are going to bounce on the 80MA and head south again, EURJPY is going to bounce on its 80MA as well with a little lag and head north.

So here is what I have really not been able to determine:
2) What makes the correlation EURJPY (or any other of these 4 pairs)/Indexes (Dow and Nasdaq) shift from positive to negative in this way? I have been turning this in every way I have been thinking about with the strengh meter, but nothing really clear appeared (I have been following quite close what you are talking about Nvp, especially with the USD and Yen crossing together the 0 line).

Does anyone has an input on these to questions:
2) What makes the correlation EURJPY (or any other of these 4 pairs)/Indexes (Dow and Nasdaq) shift from positive to negative?
1) How is it that the indexes move before the currency pairs?

Thanks for reading, happy trading to all,

L