Best Thread Correlation Trading - Basic Ideas and Strategies

the website is a little crowded and has a shopwindow feel but not bad at all and a lot of free stuff knocking around .........i'm going to take a look through the traders mentioned here as some i havnt heard of

and the Vic Sperandeo piece is a gem ...

N

Best Currency Traders - blank-5
 
Michael Marcus .....never heard of him ....but he was in Market Wizards ......i like him already ......3 tips from this guy

A Very Simple and Effective Trading Tip

“You absolutely want to put down a [short] bet when a market acts terribly relative to everything else. When the news is wonderful and a market can't go up, then you want to be sure to be short.”

One the the simplest tips you can use is to watch for a bearish market struggle to higher or even fall, on the realize of bullish news and look to trade the other way and vice versa in a bear market because the news is discounted by traders and there are high odds of a reversal which you can time with your trading charts.

hes talking relative strength here and i use this a lot in my own forex trading techniques ..........if a currency is acting like a dog and indications are it s/be flying then I am ready to short it .....and vice versa



See the Reality and Trade the Truth

“Objectivity A good trader can't be rigid. If you can find somebody who is really open to seeing anything, then you have found the raw ingredient of a good trader”

Most people see the market through a fog which clouded by news reports, other peoples opinions and their own emotions. One of the keys to trading success is to see the market action, as it is and trade the truth which is presented to you on the charts. You need to free you mind, be totally logical and objective, when looking at your charts and executing your trading signals.

in Forex I see the truth by watching my FXcorrelator..........I watch the interaction of 8 currencies and their relative strengths to each other ........thats a shedload of Truth 24/7 .......


Money Management Tips

Always use stops. I mean actually put them in, because that commits you to get out at a certain point"

How many times have we stressed this point in articles? Lot's of times but there is no hard in stressing it again – as soon as you place a trade in the market, decide your get out point and stick with it. Put the stop in the market and don't use a mental stop – why? Because if you miss it, you will let the loss run and this is one, of the most fatal trading errors you can make.

“The first thing I would say is always bet less than 5 percent of your money on any one idea. That way you can be wrong more than twenty times; it will take you a long time to lose your money. I would emphasize that the 5 percent applies to one idea. If you take a long position in two different related grain markets, that is still one idea."

He is talking about commodities but the same logic applies to currencies. Don't OVER commit yourself to a lot of trades, in correlated pairs which will move together - treat them as one idea so as not to blow up your account.

this last comment above bit is very important to my trading and the key to making profits using the FXcorrelator ........you have to understand the correlation and dynamics of the 8 individual currencies to maximise returns and minimise risk .........
 
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NVP said:
hey all

Well I stay on the Dailys as its easier to follow here and less time consuming for me ......

hmmm........well we've had a good run buying USD in last 10 days or so .....its been above the Zero and working well with the Dow being below its 20 sma ......Yen was the buy as well for a while ......but has dumped already today.....and is out of the game .......ouch

so hang fire on any remaining USD Buys......but if you look at the right chart (1ma setting on a FXCorrelator X-men indicator on a weekly chart)......their are already X men above the USD so it is now firmly under pressure this week ........

if you were still running sells on EURO, CHF , CAD (and even YEN) against the Yen you are still in business as they are below the 1ma chart .....but any Sells you had re GBP or the Aussies are going going or already gone and you need to consider taking any profits made in the last week or 2 ....

thats it gang ............simpler simpler simpler .....

N
Click to expand...

hey all

well the dow is fighting back now ....the yen has fallen big time and also any USD strength is seriously fading ........look at that right cahrt on the weeks action so far .......usd below zero

the question is would one hold ground and hope the usd will recover or bail on any remaining USD buy positions ??

your money your call :smart:

N
 

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mornin all

busy busy again ...........I will try to post something later on lower TF's if I get time to do some trading myself ..........

currently I see USD fighting back north on lower TF's since opening London trading which is encouraging

N
 
AudUsd and Copper: reversal techniques tests for both.
 

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some nice buys forming on NZD and AUD selling USD ......(15m TF)

in (a few mins back ) on NZD at 0.7892 and AUD at 0.9130

lets see .....

N
 
there was a U/J sell screaming at me a while back at around 100.09 but I ignored it ..... damn price is 99.95 now I see so would have had a nice cushion into a possible run down ........

I think the Aussies have more legs though .....
 
on the 15m TF's 10-15 pips is all i can expect on any half decent pair run really before the market retraces .........I'm watching the A/U and N/U like a hawk as I might take the handful of pips I have as I need to go to a meeting soon

N
 
ok i've locked in about 9 pips (combined) as have to go .........

later
N
 
mornin all ....already in meetings unfortunalely ......will touch base later

n
 
Hi, I'm new to this thread and haven't trawled through all the posts, but was wondering if anyone had had any success with trading Brent/WTI correlations? I've been reading about a strategy that does that, but I don't know anything about commodities trading, and wondered if you had any insight?
 
Mrs M said:
Hi, I'm new to this thread and haven't trawled through all the posts, but was wondering if anyone had had any success with trading Brent/WTI correlations? I've been reading about a strategy that does that, but I don't know anything about commodities trading, and wondered if you had any insight?
Click to expand...

WTI and crude are highly correlated so how are you thinking you would trade this? Perhaps it might be easier if you post some details about the strategy that you are thinking about and then we can comment on that?

J
 
It uses a custom indicator to tell you which one is oversold/undersold, and you take a profit when they move back into alignment. That's the theory, anyway. Looking back at historical charts tho, I'm slightly nervous by how widely Brent and WTI can drift at times.
 
Mrs M said:
It uses a custom indicator to tell you which one is oversold/undersold, and you take a profit when they move back into alignment. That's the theory, anyway. Looking back at historical charts tho, I'm slightly nervous by how widely Brent and WTI can drift at times.
Click to expand...

I guess it depends over what period you want to trade. Assuming you are trading off the daily chart it should work just fine. Although, I would expect the trades could potentially be open for weeks at a time in order for it to become profitable, and you need to consider your financing cost.

Plus, you need to consider at what point do you enter. Assuming the instruments diverge (the correlation weakens), if you enter the trades and the instruments continue to diverge, you will have drawdown until the pair re-converge. You need to look back in history and determine how far they could diverge, in order to determine what is your potential risk. It is likely that you will require a tool that will overlay (and rescale) one instrument onto the other, so that you can compare their histories. So, yes, it is wise to be very aware of historically how much they could widen.

J
 
Mrs M said:
It uses a custom indicator to tell you which one is oversold/undersold, and you take a profit when they move back into alignment. That's the theory, anyway. Looking back at historical charts tho, I'm slightly nervous by how widely Brent and WTI can drift at times.
Click to expand...

hey there mrs M

not much more to add from me ......

the Brent /WTI "Pairs" trading play has become much more prevelant again as they started to diverge more materially last year (If I remember correctly?).............

funnily enough I started my own trading "career" on the Crude oil Desk at my first job for shell Oil Trading in the late 70's....... so this stuff takes me back to being a spotty youth ;)

re its profitability ........like anything in trading sometimes the magic works and sometimes it doesnt so all i urge is not to be irresponsible with risk...also these things tend to be difficult to set stop losses against so be careful .....there may be brokers that offer the differential as a seperate instument as well i think so a stops can be placed (?)

anyway best wishes..........perhaps take a look at a guy called joe Ross who has specialised in trading these type of commodity differentials for many many years ......

N:smart:
 
hey all

heres the week on 2 charts ............

left is the daily on a 20ma FXCorrelator & Dow
Right is the Weekly on a 1ma FXCorrelator and the Dow

Dow finally got some wind in its sails north .......on the right chart (weekly) we saw the Dow go bull for the first time in 5 weeks

the Aussie Duo seized the week and stormed north ......they were the buys (y)

Yen, Euro,CHF and USD were all caught short .....and USD spent its first week in 4 below the Zero line .........

At the start of the week I advised to still stay on USD buys until circumstances really turned nasty ............this has now happened on most Pairs ....although some of you may be still in Euro & CHF sells into USD if you entered on last weeks strong USD's move north

http://www.trade2win.com/boards/for...-basic-ideas-strategies-1467.html#post2183128


good trading
N
 

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hey all

having caught up with the Jedster this weekend I am constantly reminded that despite the 1000% belief in my Forex Strengthmeter based approaches I still do not offer Fee based formalised trading services and systems ..........

Well........

Clearly there is the commercial side to this that would impact my Threads and relationship here with T2W and the mutual trust that has built up between myself and his excellent Forum since 2004 (its not perfect but is pretty balanced and cool - go look at the competition) .....I really like popping in and out and the camaradarie ive built up with the gang over the years ..and also hopefully added a few (thousand) comments here and there and helping people on their own trading journeys ....Ive been involved in the Gambling and Trading business since I was a kid in the 60's so its in my blood and always will be .....

also if I took this step I would need to allocate some serious time to building that business and the multitude of non core responsibilities that accrue if you are passionate about making it sucessful for yourself and the customers ..........and I do like to do things properly in business and my personal life


and because of work committments I just havnt got the time at this point in my life ..........I will one day with more time but not at present .....

perhaps the only REALLY galling thing for me is the Sellinar / marketing / Junk mail brigade that plague this industry and give it the reputation it still sadly wallows in .......everytime I see the latest supersystem and the hype surrounding it drawing people in I want to cry .......people pay a lot of money for stuff that is really shiny nonsence and snakeoil......:rolleyes:.......and it really struck me even more during my recent interview with the Guardian journalist re what the hell do newbies do when they want to learn trading ......:sneaky:

hence my total obsession /passion for telling newbies here at T2W to spend time and no money learning this buisness before committing any funds to training and development ....

and indirectly then this keeps prompting me to perhaps do something more about it and provide services to people that they can use .............its no use me sniping at others and not doing something myself........

and I am painfully aware that even after 600,000 views here on this thread and my obsession for spreading the Gospel of using forex Strengthmeters people dont get it ...........I need to do more if I really want to make the difference and go the extra mile ..........

Well ?..........perhaps one day but sorry that day is still not here dudes .........so the frustation is that whilst I (and a few others in the know) see the enormous gamechanging benefits of utilising Forex strengthmeter based approaches in Trading all I can do is offer up My Free systems and ideas here on a daily basis which i continue to do .......

please look at the free system below and please take a look at incorporating Strengthmeters into
your forex Trading .....it will bring a new dimension and assist your profitability if used sensibly

Please ask me any questions here as we have a lot of experts around the place including our resident Trader and superprogrammer...... the Jedster**

and please let me know if you see any vendors selling Strengthmeters to you ...........I would be happy to take a look under the bonnet to ensure you are not paying silly money for free products and offer alternative solutions ...........

cheers
N

** some say he invented Jam ......others say he created the first known Mt4 programme in 2,000 bc (before cobol).............some even say he created the Euro...... all we know him as is......... the Jedster !)
 
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