Best Thread Correlation Trading - Basic Ideas and Strategies
NVP
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Good Question !
There are many many variations of Strengthmeters out there in the Forex Cosmos
and very much like the MACD indicator.... the key is in the settings...
My FxCorrelator is like a Ferrari.....I show it here ticking along at a 20 ma on a Delta 1 setting.....simple, slow and reliable
if you vary the Delta that changes the horizon completely (try it).....and if you change the ma that will change things dramatically also (try it)
but I also have private versions that can show ridiculously exotic multiple combinations of Timeframes , MA's and other things we never discuss here....
like MA type, the bar position (weighted , close , open ,average)..and even playing with delayed/previous bar signals verses current to accelerate the movements
the list is endless .....
the coding on the CCFP version is a 2 speed stochastic version I dont offer here
..............I dont know the exact settings of Nigels Hawkeye FATMAN , Henry (lius) Strengthmeter or Tom Yeomans CSM gangs accustrength
sure I have a rough idea and have exchanged thoughts with all these guys ....but it doesnt matter as we have all created stuff that works for us .....and remember I mix in Equity correlation as well :smart:
suffice to say they all operate under the same rules .........buy a rising strength currency and sell a falling strength currency
and it works for all of us
N
Good Question !
There are many many variations of Strengthmeters out there in the Forex Cosmos
and very much like the MACD indicator.... the key is in the settings...
My FxCorrelator is like a Ferrari.....I show it here ticking along at a 20 ma on a Delta 1 setting.....simple, slow and reliable
N
Thanks again, so 20 and delta 1 are your preferred settings?
Joules MM1
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NVP
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heres the 20ma setting in action this week on a 1hr TF......
in this example we are only taking the 20ma FXcorrelator signal when the Dow is above (or Below) both the 20sma and the 80 ma
not bad re giving you an edge on chosing which pairings to trade ?
N
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NVP
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NVP
Guest Author
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- 2,142
Joules MM1
Established member
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- 648
- Likes
- 142
NVP
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the obvious bias Directions on the 1000ma charts and the arrows on the 20ma charts indicate the direction one should be trading the Yellow yen and the green USD
these are Guideline charts ........no specifics....that costs a lot more and i'm not cheap !
N
NVP
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later all...I might try and put another long overdue video up on YouTube tomorrow
(heres my current offerings - about 26 Videos now trimmed from a lot more !)
https://www.youtube.com/user/FXCORRELATOR?feature=mhee
Depends if I get dragged out to look at properties by the wife as our deal just fell though on one we were buying .........
jees homeless again soon.....
N
(heres my current offerings - about 26 Videos now trimmed from a lot more !)
https://www.youtube.com/user/FXCORRELATOR?feature=mhee
Depends if I get dragged out to look at properties by the wife as our deal just fell though on one we were buying .........
jees homeless again soon.....
N
N.
I am not sure whether this is the right place for unrelated questions and comments. However here goes anyway. I have installed and have running your currency meter. I have not yet made the lines for the usd and jpy bold. But I believe this is just a matter of changing line thicknesses. If that is incorrect please advise. Is there a way to remove or make invisible the line representing any one currency? I would like to have the USD/EUR chart show only the USD, JPY, and EUR. If this is possible, how would I do it?
Now an observation for those in North America having difficulty getting the dow 30 chart. If you go to fxcm and their free chart area you will find something called netdania. On there you will find the dow 30 chart. Although I can't superimpose the currency meter on this chart, because it is not metatrader. What I have done is to open any currency pair on metatrader, and install the currency meter indicators. Then I have merely increased the size of this indicator panel to occupy the entire chart space. Not ideal, but workable. Hope that is helpful.
R.
NVP
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Heres Colin Twiggs.....he runs a good newsletter focusing on key global Markets and technicals
More fixing and massaging the markets to come ?....bank on it !
N
When Austerity Fails
By Colin Twiggs
June 6th, 2012 1:00 a.m. ET (5:00 p:m AET)
These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.
Austerity decimated Asian economies during their 1997/98 financial crisis and similar measures have failed to rescue the PIIGS in Europe 2012. David Cameron's austerity measures have also not saved the UK from falling back into recession. So why is Wayne Swan in Australia so proud of his balanced budget? And why does Barack Obama threaten the wealthy with increased taxes while the GOP advocate spending cuts in order to reduce the US deficit? Are we condemned to follow Europe into a deflationary spiral?
How Did We Get Here?
First, let's examine the causes of the current financial crisis.
Government deficits have been around for centuries. States would borrow in order to finance wars but were then left with the problem of repayment. Countries frequently defaulted, but this created difficulties in accessing further finance; so governments resorted to debasing their currencies. Initially they substituted coins with a lower metal content for the original issue. Then introduction of fiat currencies — with no right of conversion to an underlying gold/silver standard — made debasement a lot easier. Issuing more paper currency simply reduced the value of each note in circulation. Advent of the digital age made debasement still easier, with transfer of balances between electronic accounts largely replacing paper money. Fiscal deficits, previously confined to wars, became regular government policy; employed as a stealth tax and redistributed in the form of welfare benefits to large voting blocks.
Along with fiscal deficits came easy monetary policy — also known as debt expansion. Lower interest rates fueled greater demand for debt, which bankers, with assistance from the central bank, were only too willing to accommodate. I will not go into a lengthy exposition of how banks create money, but banks expand their balance sheets by lending money they do not have, confident in the knowledge that recipients will deposit the proceeds back in the banking system — which is then used to fund the original loan. Expanding bank balance sheets inject new money into the system, debasing the currency as effectively as if they were running a printing press in the basement.
The combination of rising prices and low interest rates is a heady mix investors cannot resist, leading to speculative bubbles in real estate or stocks. So why do governments encourage debt expansion? Because (A) it creates a temporary high — a false sense of well-being before inflation takes hold; and (B) it debases the currency, inflating tax revenues while reducing the real value of government debt.
Continuous government deficits and debt expansion via the financial sector have brought us to the edge of the precipice. The problem is: finding a way back — none of the solutions seem to work.
Austerity
Slashing government spending, cutting back on investment programs, and raising taxes in order to reduce the fiscal deficit may appear a logical response to the crisis. Reversing policies that caused the problem will reduce their eventual impact, but you have to do that before the financial crisis — not after. With bank credit contracting and aggregate demand shrinking, it is too late to throw the engine into reverse — you are already going backwards. The economy is already slowing. Rather than reducing harmful side-effects, austerity applied at the wrong time will simply amplify them.
The 1997 Asian Crisis
We are repeating the mistakes of the 1997/98 Asian crisis. Joseph Stiglitz, at the time chief economist at the World Bank, warned the IMF of the perils of austerity measures imposed on recipients of IMF support. He was politely ignored. By July 1998, 13 months after the start of the crisis, GNP had fallen by 83 percent in Indonesia and between 30 and 40 percent in other recipients of IMF "assistance". Thailand, Indonesia, Malaysia, South Korea and the Phillipines reduced government deficits, allowed insolvent banks to fail, and raised interest rates in response to IMF demands. Currency devaluations, waves of bankruptcies, real estate busts, collapse of entire industries and soaring unemployment followed — leading to social unrest. Contracting bank lending without compensatory fiscal deficits led to a deflationary spiral, while raising interest rates failed to protect currencies from devaluation.
The same failed policies are being pursued today, simply because continuing fiscal deficits and ballooning public debt are a frightening alternative.
The Lesser of Two Evils
At some point political leaders are going to realize the futility of further austerity measures and resort to the hair of the dog that bit them. Bond markets are likely to resist further increases in public debt and deficits would have to be funded directly or indirectly by the central bank/Federal Reserve. Inflation would rise. Effectively the government is printing fresh new dollar bills with nothing to back them.
The short-term payoff would be fourfold. Rising inflation increases tax revenues while at the same time decreasing the value of public debt in real terms. Real estate values rise, restoring many underwater mortgages to solvency, and rescuing banks threatened by falling house prices. Finally, inflation would discourage currency manipulation. Asian exporters who keep their currencies at artificially low values, by purchasing $trillions of US treasuries to offset the current account imbalance, will suffer a capital loss on their investments.
The long-term costs — inflation, speculative bubbles and financial crises — are likely to be out-weighed by the short-term benefits when it comes to counting votes. Even rising national debt would to some extent be offset by rising nominal GDP, stabilizing the debt-to-GDP ratio. And if deficits are used to fund productive infrastructure, rather than squandered on public fountains and bridges-to-nowhere, that will further enhance GDP growth while ensuring that the state has real assets to show for the debt incurred.
Not "If" but "When"
Faced with the failure of austerity measures, governments are likely to abandon them and resort to the printing press — fiscal deficits and quantitative easing. It is more a case of "when" rather than "if". Successful traders/investors will need to allow for this in their strategies, timing their purchases to take advantage of the shift.
More fixing and massaging the markets to come ?....bank on it !
N
When Austerity Fails
By Colin Twiggs
June 6th, 2012 1:00 a.m. ET (5:00 p:m AET)
These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.
Austerity decimated Asian economies during their 1997/98 financial crisis and similar measures have failed to rescue the PIIGS in Europe 2012. David Cameron's austerity measures have also not saved the UK from falling back into recession. So why is Wayne Swan in Australia so proud of his balanced budget? And why does Barack Obama threaten the wealthy with increased taxes while the GOP advocate spending cuts in order to reduce the US deficit? Are we condemned to follow Europe into a deflationary spiral?
How Did We Get Here?
First, let's examine the causes of the current financial crisis.
Government deficits have been around for centuries. States would borrow in order to finance wars but were then left with the problem of repayment. Countries frequently defaulted, but this created difficulties in accessing further finance; so governments resorted to debasing their currencies. Initially they substituted coins with a lower metal content for the original issue. Then introduction of fiat currencies — with no right of conversion to an underlying gold/silver standard — made debasement a lot easier. Issuing more paper currency simply reduced the value of each note in circulation. Advent of the digital age made debasement still easier, with transfer of balances between electronic accounts largely replacing paper money. Fiscal deficits, previously confined to wars, became regular government policy; employed as a stealth tax and redistributed in the form of welfare benefits to large voting blocks.
Along with fiscal deficits came easy monetary policy — also known as debt expansion. Lower interest rates fueled greater demand for debt, which bankers, with assistance from the central bank, were only too willing to accommodate. I will not go into a lengthy exposition of how banks create money, but banks expand their balance sheets by lending money they do not have, confident in the knowledge that recipients will deposit the proceeds back in the banking system — which is then used to fund the original loan. Expanding bank balance sheets inject new money into the system, debasing the currency as effectively as if they were running a printing press in the basement.
The combination of rising prices and low interest rates is a heady mix investors cannot resist, leading to speculative bubbles in real estate or stocks. So why do governments encourage debt expansion? Because (A) it creates a temporary high — a false sense of well-being before inflation takes hold; and (B) it debases the currency, inflating tax revenues while reducing the real value of government debt.
Continuous government deficits and debt expansion via the financial sector have brought us to the edge of the precipice. The problem is: finding a way back — none of the solutions seem to work.
Austerity
Slashing government spending, cutting back on investment programs, and raising taxes in order to reduce the fiscal deficit may appear a logical response to the crisis. Reversing policies that caused the problem will reduce their eventual impact, but you have to do that before the financial crisis — not after. With bank credit contracting and aggregate demand shrinking, it is too late to throw the engine into reverse — you are already going backwards. The economy is already slowing. Rather than reducing harmful side-effects, austerity applied at the wrong time will simply amplify them.
The 1997 Asian Crisis
We are repeating the mistakes of the 1997/98 Asian crisis. Joseph Stiglitz, at the time chief economist at the World Bank, warned the IMF of the perils of austerity measures imposed on recipients of IMF support. He was politely ignored. By July 1998, 13 months after the start of the crisis, GNP had fallen by 83 percent in Indonesia and between 30 and 40 percent in other recipients of IMF "assistance". Thailand, Indonesia, Malaysia, South Korea and the Phillipines reduced government deficits, allowed insolvent banks to fail, and raised interest rates in response to IMF demands. Currency devaluations, waves of bankruptcies, real estate busts, collapse of entire industries and soaring unemployment followed — leading to social unrest. Contracting bank lending without compensatory fiscal deficits led to a deflationary spiral, while raising interest rates failed to protect currencies from devaluation.
The same failed policies are being pursued today, simply because continuing fiscal deficits and ballooning public debt are a frightening alternative.
The Lesser of Two Evils
At some point political leaders are going to realize the futility of further austerity measures and resort to the hair of the dog that bit them. Bond markets are likely to resist further increases in public debt and deficits would have to be funded directly or indirectly by the central bank/Federal Reserve. Inflation would rise. Effectively the government is printing fresh new dollar bills with nothing to back them.
The short-term payoff would be fourfold. Rising inflation increases tax revenues while at the same time decreasing the value of public debt in real terms. Real estate values rise, restoring many underwater mortgages to solvency, and rescuing banks threatened by falling house prices. Finally, inflation would discourage currency manipulation. Asian exporters who keep their currencies at artificially low values, by purchasing $trillions of US treasuries to offset the current account imbalance, will suffer a capital loss on their investments.
The long-term costs — inflation, speculative bubbles and financial crises — are likely to be out-weighed by the short-term benefits when it comes to counting votes. Even rising national debt would to some extent be offset by rising nominal GDP, stabilizing the debt-to-GDP ratio. And if deficits are used to fund productive infrastructure, rather than squandered on public fountains and bridges-to-nowhere, that will further enhance GDP growth while ensuring that the state has real assets to show for the debt incurred.
Not "If" but "When"
Faced with the failure of austerity measures, governments are likely to abandon them and resort to the printing press — fiscal deficits and quantitative easing. It is more a case of "when" rather than "if". Successful traders/investors will need to allow for this in their strategies, timing their purchases to take advantage of the shift.
NVP
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jees this morning is gonna be a pain.........probably whipsawing until all that euro excitement settles down .....and we get the US online
the clear bias is for Yen and USD sells (on higher TF's)...but even thats a little oversold and may allow some retracing on lower TF's
so we are in Limbo.....which his really where mondays are normally (whatever normal is !)
N
the clear bias is for Yen and USD sells (on higher TF's)...but even thats a little oversold and may allow some retracing on lower TF's
so we are in Limbo.....which his really where mondays are normally (whatever normal is !)
N
NVP
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Hey R
good work on the Netdania......hopefully will help our US readers / followers
the Indicator s/be showing yen and USD as bold automatically....close and repopen your platform then righhclick the indicator and open up the indicator settings and press "reset" on any screen that offers it
the chart should repaint.........
or just switch up and down timeframes a few times and again the chart should repaint
to adjust the chart manually right click on chart go to indicator settings and play with these menus...............its all here....bold , remove lines etc...just experiment....you cannot break anything as just reload it again if problems :smart:
N
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NVP
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I have to say that Gold is disapointing me currently....
here it is on the right chart alongside my 20ma indicator available in signature area below
the violet (gold) relative price is being compared the the G8 currencies we trade here every day on a 20ma
hmmmm..it got jiggy recently and I though we were out of the traps as the fiat currencies all went south ......even USD currency fell to set up a classic buy signal for me on the XAU/USD........
but no ..........Gold is falling alongside the usd and yen on that right chart and the orange AUD line is back as TOP dog on this daily chart (???)
such is life...Golds time will come ........
c'mon ECB run those damn printing presses and lets start that Global currency Printoff competion !
N
here it is on the right chart alongside my 20ma indicator available in signature area below
the violet (gold) relative price is being compared the the G8 currencies we trade here every day on a 20ma
hmmmm..it got jiggy recently and I though we were out of the traps as the fiat currencies all went south ......even USD currency fell to set up a classic buy signal for me on the XAU/USD........
but no ..........Gold is falling alongside the usd and yen on that right chart and the orange AUD line is back as TOP dog on this daily chart (???)
such is life...Golds time will come ........
c'mon ECB run those damn printing presses and lets start that Global currency Printoff competion !
N
