Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

heres action today...the red means most influential new to forex markets orange is less important....although remember that the G8 game is like kids in a playground.....the majority are always picking on he minority and in many cases just one victm ...

in the more extreme bullying scenarios..........(like at this moment where the Eurotwins are about as popular as Tiger woods is with his sponsors :whistling ) ANY weak news updates relating to these dudes regardless of the weighting (red , orange , green !) will usually be an excuse to hit them harder re selling

I am not a huge expert on news releases vs related price reactions but I am told that it can be very very interesting to watch the degree of price impact news creates......and if the currency is not impacted as much s it should be........well....hmmm.....:smart:

good luck today......and be careful out there

N

 

[jrplimited]

Hi N and all,

Its the morning after yesterday's party and G and E are suffering the fate of over indulgence - lucky SoBs; when is Friday finally going to get here so I too can feel THAT suffering?!!

GU; Resisted temptation to go long initially and had to wait for price to move back down and re-start its climb all over again from 09:05 bar. Placed first trade buy stop at 54302 and after hesitating 09:20 bar filled this and price wandered around a bit but was certainly pointing northwards and 10:00 bar pushed price up but there was no follow through momentum so it slid down again taking out TS during 10:10 bar's tail for 9 pip profit. Second trade rashly entered long on 10:50 bar just as price decided to go down, then pause and resume downwards again to take out SL during 11:10 bar for 21 pip loss.

EU; Had buy stop set at 35484 and 08:35 plus following bar tickled this but thankfully (or should that be luckily!) didnt fill it, waited to see if price would reverse and flag a short but 09:05 bar stopped the decline and price decided to go back up the hill again. Buy stop set at 35358 and at last 10:00 bar took this out and price woke up and went northbound, did a retrace after 10:15 bar which just missed TS then tried to go higher but couldnt sustain the move so TS pulled up a bit tighter and 11:00 bar hit this for 14 pip profit.

EG; This pair was still legless after yesterday's party! Definitely a case of leaving the drunk well alone....

Bit of a chop monster day here in retrospect but thats hardly surprising as markets really did blow themselves out yesterday, hopefully you will all be able to pick off some pips this afternoon when our cousins across the pond get active - trade well and regards,
Simon.

 

[NVP]

Hi N and all,

Its the morning after yesterday's party and G and E are suffering the fate of over indulgence - lucky SoBs; when is Friday finally going to get here so I too can feel THAT suffering?!!

GU; Placed first trade buy stop at 54302 and after hesitating 09:20 bar filled this for 9 pip profit. Second trade rashly entered long on 10:50 bar for 21 pip loss.

EU; Buy stop set at 35358 and at last 10:00 bar took this out for 14 pip profit.

EG; This pair was still legless after yesterday's party! Definitely a case of leaving the drunk well alone....

Bit of a chop monster day here in retrospect but thats hardly surprising as markets really did blow themselves out yesterday, hopefully you will all be able to pick off some pips this afternoon when our cousins across the pond get active - trade well and regards,
Simon.

Hi mate............B/E into the pm session then.......

newbies note how experienced traders with discipline and robust systems generally will keep the money in their bank during the choppy times...

N

 

[NVP]

JRP was trying to balance cards in a tornado this morning.....:innocent:

all together now (same music as yesterday)....

always remember these dudes when the correlation principles on Tag vs markets look good.....but it seems the Eurotwins wont oblidge .....AussieD is my fav

N

 

[NVP]

what a hoot re gold and mr S !

http://www.moneyweek.com/investment...r&utm_medium=email&utm_campaign=Money+Morning

Gold has been falling in relative terms (verses the G8 basket) since mr S talked.............and then he will (is?) step back in to buy it again ......possibly using a weighted basket of currencies to protect himself just in case (ie not just in USD) .....

Jees..........never play cards with this man......

G8 currency credibility has a long way to go before gold becomes a follower again so its gonna fair ok'ish at present (in terms of the G8 weighted basket) verses other commodities and assets......this is because the dude can jump between commodity and currency status (the 9th currency in G9) at whim and dependent on markets perceptions at the time.....you cant use crude oil or the dow30 index to buy bread if the chips all go down.....

and if the chips go down you can pick them up at make a sandwich with the bread



N

 

[NVP]

sorry but gotta go back to the grindstone.....

heres current market...............markets pushing upwards again so if US bursts into action and gold keeps rising expect good falls from the tag

the eurotwins this morning were surprisingly bullish against a rising tag so perhaps this bias will remain and we'll get some nice Buy E/U's and G/U's into afternoon.....

whatever ..........!!!
N

 

[jrplimited]

Hi N,

Reminds me of that infamous UK based syndicate that used to drive punters mad on Betfair a few years ago. The syndicate would start backing a favourite nag on exchanges and start to drive price downwards, then sucker punters would chase price down as well and syndicate would clean up by laying the false favourite at a far lower price - ie they would lock in profit no matter what a race outcome would be.

Looks like Mr. S has seen that one as well....
Simon.

 

[NVP]

Hi N,

Reminds me of that infamous UK based syndicate that used to drive punters mad on Betfair a few years ago. The syndicate would start backing a favourite nag on exchanges and start to drive price downwards, then sucker punters would chase price down as well and syndicate would clean up by laying the false favourite at a far lower price - ie they would lock in profit no matter what a race outcome would be.

Looks like Mr. S has seen that one as well....
Simon.

absolutely .......if the dude was doing this from a New jersey boiler room he would be in prison now

bet he never made 200+ pips yesterday though !

N



boi

 

[NVP]

hey mate

think we should start a rumour to force GBP downwards ?

let me see...........what shameful lies can we print here to make it look bad

uncontrollable public debt
property market looking shaky
election this year....outcome unknown
poor GDP and no prospects of pick up
Unemployment worse levels for years
Chancellor who looks like groucho marx

yeah that will do it.............mind you who would actually believe all that nonsence....

N

 

[jrplimited]

hey mate

think we should start a rumour to force GBP downwards ?

let me see...........what shameful lies can we print here to make it look bad

uncontrollable public debt
property market looking shaky
election this year....outcome unknown
poor GDP and no prospects of pick up
Unemployment worse levels for years
Chancellor who looks like groucho marx

yeah that will do it.............mind you who would actually believe all that nonsence....

N

Hi N,

I'd do opposite just like current government is trying to do....

Public debt will be tackled no probs next year; mortgage application are rising fast; we will easily win election; GDP has found bottom and will rise fast in line with other major economies; unemployment has peaked and now shows strong decline; ugly chancellor will be sacked straight after we win general election - got an even uglier one as replacement!

Now Great British Peso will rise rapido on that line of spin so we all can place sell stops tracked below price and just wait for inevitable fall out when the truth comes home to roost - that sounds like a plan!

Simon.

 

[NVP]

its working !!!

GBP is cr*p............Gordon Brown bullies babies......Cameron wears girly suspenders......our next england team photo will be taken from the waste down and sent by phone text to all fans ......cheryl cole to be next prime minister.............



N

 

[NVP]

mornin...

the overnights were rocking......markets down.....tag up and eurozone mildly down.....60-70 pips there on both E/U and G/U since midnight

ive expanded a 1h corrie (1k/1) on the right to show the solid gains the tag team are making this week...........regardess of news I would be surprised if we didnt get a little retrace acion before the weekend.....:whistling

hmmm......should never have made that cheryl cole for prime minister comment as nothng but G/U falls ever since......
N

 

[NVP]

heres our standard corrie 1000/1 on 5m with all 8 in attendance

I cannot remember a more recent overnight that shows what I preach about here a lot......Market down, TAG up and G6 down.......although the G6 do end to be more shotgun pattern than this eh !

to me the standard pair correlation % ratios you see in ouanda etc etc are 1 step to far away from the true correlations to watch for......correlating Dow to G/U or E/J are diluted and ineffectual..... my correlation ideas are that the frontline correlations (much more tight) are using the Market corelations to USD and JPY (via the corrie) and then moving to a secondary correlation for tag to the G6

so in fact a 54% positive correlation of Gold to E/U is actually a 90%+ negative correlation of Gold to USD multiplied by a 60% negative correlation of Usd to Euro.......

and believe me this distinction is very important for understanding true correlation priniciples in forex and market dynamics.....dissecting the parts allows greater understanding of the whole......

time for work....
N

 

[NVP]

better late than never..........

great news for GBP at 9.30 am then...........

funnily enough my charts tell me GBP was falling prior to 9.30am then has rallied since......go figure that

a couple of biggie us news releases around opening time will liven things up later


N

 

[jrplimited]

Hi N and all those invisible ones out there,

Straight into this morning's rather sticky bun fight:-

GU; Wasnt sure whether price wanted to break out upwards to start off with but 08:20 bar gave a big hint to that question! After 08:25 bar close sell stop set at 53192 and following weak down bar just filled this then momentum kicked in and drove price down, then it consolidated for five bars before engaging gear and motoring on southwards again. Local low print was exceeded by 09:35 bar after small retrace and price started to turn around and hit TS during 09:45 bar for 28 pip profit. Second trade waited for price to top out on 10:10 bar and on close of 10:20 bar sell stop placed at 53068 which was filled during 10:30 bar. Price started to drift lower without any real momentum and after 11:00 down bar I started to trail price aggressively in case a "spike" changed this weak market sentiment and sure enough 11:35 bar popped up to prove this very point and next wick of 11:40 down bar took out TS for 8 pip profit.

EU; Buy stop at 34914 filled during 08:10 bar but price rolled over then rose again without much conviction and slithered down the slippery slope and took out adjusted SL at near end of 09:00 bar for 9 pip loss. Second trade buy stop at 34958 filled by 09:45 bar and yet again price retreated downwards from this but managed to recover on 10:00 bar and next bar shot downwards (news release?) then it too recovered to close higher. Price found a local high on 10:15 bar then rolled over to hit BE point on tail of 10:35 bar for zilch pip.

EG; Frustrating price action on this pair. Buy stop at 88114 hit by 08:35 bar and price dropped into shallow retrace for four bars before rising above initial entry point and doing another small retrace then finally popping up to form local high on 09:35 bar. After that price couldnt find any momentum and locked itself into a tightish range plus chart went a bit haywire with very low volatility, so I decided to simply bail out on close of 11:10 bar for a terrible 6 pip profit - all that exposure for peanuts!

It seemed like the market was a bit sleepy and still hungover from Tuesday's "bash" this morning, so maybe you will all be able to catch some decent moves when things liven up this afternoon, starting off with the late lunchtime US news releases - trade well and regards,
Simon.

 

[NVP]

Hi N and all those invisible ones out there,

Straight into this morning's rather sticky bun fight:-

GU; After 08:25 bar close sell stop set at 53192 for 28 pip profit. Second trade sell stop placed at 53068 which was filled during 10:30 bar. for 8 pip profit.

EU; Buy stop at 34914 filled during 08:10 bar for 9 pip loss. Second trade buy stop at 34958 filled by 09:45 bar for zilch pip.

EG; Frustrating price action on this pair. Buy stop at 88114 hit by 08:35 bar for a terrible 6 pip profit - all that exposure for peanuts!

It seemed like the market was a bit sleepy and still hungover from Tuesday's "bash" this morning, so maybe you will all be able to catch some decent moves when things liven up this afternoon, starting off with the late lunchtime US news releases - trade well and regards,
Simon.

thats 30+ pips mate ............dont beat yourself up

N
sorry all stuffed at work............

 

[NVP]

Who ya gonna call ?

..Broken record my friends...........

altogether now.....who ya gonna call ? ..........

 

[NVP]

mornin all......

overnight the markets rose aggressively (following yesterdays rollercoaster falls) driving tag team down and the Eurotwins behaved neutral/bullish for a few pips......alongside other G6 so nothing evident re any tribe or single currency domination there

Fridays are always fun so watch the new releases and the unwinds that can come.....markets did rally aggressively late yesterday and through the night following a very bearish week so the obvious play looks a like a little retracing....but what do I know :innocent:

and......be careful out there !
N

 

[jrplimited]

Hi N and all else,

Yipee its Friday so tonight the orange squash and copious amounts of tea gets substituted for the red nectar giggly juice - cue start of happy weekend! Here is this morning's bun fight:-

GU; Market seemed to want to go upwards from the start, buy stop at 52598 filled easily by 08:30 bar and price drove up then went into reverse for three bars, then changed its mind again and motored on northwards. 09:20 bar showed a little stalling characteristic so TS pulled up more tighter and shocking (bad news release?) large 09:30 down bar took this out for 27 pip profit - had a few pips slippage there. Held off trading for a while as I always wait for price to settle after large spike bars. Couldnt find decent setup for second trade until 11:15 bar and opened short at 52364, price drifted slightly higher for three bars then dropped down below entry point, paused and dropped once more on 11:45 bar. Exited trade on close 11:55 bar for quick 13 pip profit as time had ran out for me

EU; Fell into the bear trap by going short on 08:25 bar and SL hit during 08:35 bar for 18 pip loss. Opened long at 35768 on 08:40 bar and muttered abuse at price as it immediately went into reverse for six bars then slowly started to rise up again (abuse changed to praise!) until 09:35 bar pushed price nicely upwards. Price faltered just over the 36 mark and retraced, then went into a fairly tight range with higher highs and lower lows so I waited to see if it would take out local high, 10:40 bar touched it but retreated and just as I was thinking about pulling the plug, next bar raised itself firmly above this but fell over again taking out TS during 10:55 bar for 34 pip profit. Left this pair alone after second trade as it took over two hours to complete!

EG; First trade entered short at 88829 on 08:35 bar, price drifted a little then dropped down enough to adjust SL but big reaction 09:30 bar took this out for 3 pip loss. Waited an hour after spike bar then set buy stop at 89178 which was filled during 10:40 bar, price rose up, retreated to just above entry point, rose weakly again then got itself into a virtual nothing range so I exited after 11:30 bar close for 2 pip profit.

Bit of a weird morning session with a dramatic turnaround on GU but it is Friday, so anything goes I guess!! Trade well and regards,
Simon.

 

[NVP]

Hi N and all else,

GU; Market seemed to want to go upwards from the start, buy stop at 52598 filled easily by 08:30 bar for 27 pip profit second trade 11:15 bar and opened short at 52364, for quick 13 pip profit as time had ran out for me

EU; Fell into the bear trap by going short on 08:25 bar and SL hit during 08:35 bar for 18 pip loss. Opened long at 35768 on 08:40 bar for 34 pip profit. Left this pair alone after second trade as it took over two hours to complete!

EG; First trade entered short at 88829 on 08:35 bar for 3 pip loss. Waited an hour after spike bar then set buy stop at 89178 which was filled during 10:40 bar, for 2 pip profit.

Bit of a weird morning session with a dramatic turnaround on GU but it is Friday, so anything goes I guess!! Trade well and regards,
Simon.

hey mate.......nice steady money again.....enjoy the drinkypoos and dont get into any trouble as we need you bright and early monday morning :cheers:

i'm stuffed at work so will try to post later......
N