Best Thread Correlation Trading - Basic Ideas and Strategies

NVP

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Hey NVP I hope that you are doing good. What do you think about potential spread trading?

I was thinking that maybe it won't be bad to look for wide spreads between two currencies but instead of watching to buy stronger currencies, I am watching that spread will eventually back into normal between two currencies, which mean spread will decrease. Of course, I will like to currencies to start decreasing the spread before the eventual entry and of course price action must go with it

hi peter - hope you are well my friend

so - are you are talking about finding the 2 most divergent currencies and trading the convergence ? ......yes thats a pretty standard approach that i have talked about a lot over the years on my trade2win forum .........2-3 years or more back

in truth i rarely trade that strategy as i mainly chase trends....but it can be very effective if combined with the usual other o/b o/s indicators on the pair chart identified as alpha divergent in the g8 ..........like BBs and RSIs etc ..........you could easily combine price action patterns and perhaps some S/R levels to complete the strategy

you will normally find that CAD , Yen and GBP will dominate this strategy in pairs .....because they are the most volatile normally ........interestingly if yuo found an alpha divergence with currencies that are not on this trio that indeed would probably be worth looking at for a retrace trade

look at below ....5 min london morning on a 20ma FXCorrelator

see how the Yellow yen , red gbp and brown cad are ALWAYS either max or min value currency ?

sure some of them do reverse ..but the skew of the MA will always look better than it normally is

happy to talk more on this my friend ...........

had a great morning selling Cable today


N

heres a 1hour chart
20 ma FXCorrelator
20 ma BB on 2 standard devs

so i look for retrace trades when red GBP and yellow Yen are max and min currencies vs zero line

is it a strategy ......sure its not too bad ......just sprinkle in some additional price action confirmation .....perhaps some S/R confluence ......

ive discussed this at length in many many posts a few years back and its not too bad

I scalp and trade on much higher probability signals than these ...but then again perhaps i am missign something :)

N
 

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NVP

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recently sold off cable again ..........what a great day so far

took it around 2652 after the big bull move .....down at 2942 at moment ......

too easy today
N

another recent resell....sold at 2935 to 2926 low .......risky as off the lows of cable ....but then i am also looking at where gbp index was and it was already below london lows .......
 

NVP

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36,291 1,787
really interesting ....a trader who found me online has shown me a course he paid for on forex strengthmeters

unbelievable how basic and simple it was ......jees the trader is now very unhappy when i directed him to some of my links below and he saw it all for free...........

this is rediculous ........I have been meaning to summarise all my free work and put it on udemy or somewhere else published as an e-book.....just havnt had the time

i need to pull my finger out and do it ...........

N
 

NVP

Legendary member
36,291 1,787
and finally ............

i have been selling GBP (as cable) all day (as from posts all day above)...........in that time ive scalped cable down from around 2970 to its low now of 2892............80 pips of trading area to scalp and rescalp over around 12 scalps .....

why ? ...........because GBP has been the Alpha bear currency (weakest) all the time from london 6am opens.........its never wavered !!!

so as always ........i follow a simple simple rule

sell the weakest currencies and buy the strongest ones .............

look at this 15m TF chart below on a simple 20ma setting and the red line (GBP).........it never goes above zero all day

sell sell sell sell sell sell .....GBP !!!!!


sure theres a few rules and and lessons i add to that ....all based on nearly 40 years experience in trading and of that 20 years experience in trading strengthmeters .....

I also think most traders would be surprised how i pick and time my entries .......its certainly not on the basic circus of stuff you see out there ...........but i know of a few traders who also use it with lethal effect .........and they helped me develop it to where i am happy today ......some of those mentors appeared here over the years ......on this thread and i am indebted to them .....

hey - nothings perfect ..........but I do like to tell people that successful and profitable trading is possible ...........but sadly most people look in the wrong places and give up far to easy ..............usually when their money runs out ........thats the pattern ...

shame .....

have a good weekend gang

N
 

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NVP

Legendary member
36,291 1,787
hey Gang ...

good week this week in the markets ......

 

NVP

Legendary member
36,291 1,787
sorry guys ....i have 4 thirsty builders turned up so doing them some drinks ...will be online soon
 

NVP

Legendary member
36,291 1,787
ok hey gang ....teabreak over

twitchy morning so far .....i havnt really scalped much ....

NZD is the bull currency at moment ............cad the sell

im waiting for GBP to show its colours ..........my impluse is bear off the overnights ....

low 2860s befroe i start hammering cable south

ucad buys and NZD buys are actually the primary scalps
 

NVP

Legendary member
36,291 1,787
Quoted from my Website pm emails

"So to give you my experience level: I've been watching on the sidelines for years and years and have done a lot of reading but little actual trading. I'm looking now for a time tested method that I can learn. Do you have proprietary method that you recommend? I very well might take your suggestions, but I want to get the options available first"

Hi there

I will respond to you directly on a 100% standalone strengthmeter system I can recommend for traders that doesnt take months to learn and perfect (like my scalping would)

the stuff I have out there on websites and links and youtube videos is effective but a little disjointed and novices will find it difficult to operate if they are still learning the ropes ..............so the 80/20 , the 3 ducks corrie , and other many ideas and strengthmeter systems I offer do need fine tuning from someone who understands the basics ....like a little price action validation , Support , resistance , Stop loss positioning etc etc ..............mainly things I expect a intermediate trader to do second nature without thinking.....just adding their 10% of preferences and spin to my 90% system instructions .....they are not fully documented standalone systems like many people see or buy so I will have a think and pull something together .......

I have many in the attic but I should really pull something together (for free) perhaps on Udemy or somewhere so even novices can trade a decent system with relative confidence if they follow the rules watch this space !

N
 

NVP

Legendary member
36,291 1,787
ok hey gang ....teabreak over

twitchy morning so far .....i havnt really scalped much ....

NZD is the bull currency at moment ............cad the sell

im waiting for GBP to show its colours ..........my impluse is bear off the overnights ....

low 2860s befroe i start hammering cable south

ucad buys and NZD buys are actually the primary scalps

ok correlation a little screwy today for my favourite cable pair .....half decent signal offered at 2867 a few mins back ...but i really need to wait for low 60 pullbacks earliest to be safer ....cable at 60 now so game on