Best Thread Correlation Trading - Basic Ideas and Strategies

jicssbr

Newbie
9 0
Hey Folks,

Where do I get the latest version of the fxcorrelator indicator displayed on page 350 of this forum?

Thanks a lot.
 

NVP

Legendary member
36,506 1,833

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NVP

Legendary member
36,506 1,833
Simple Strategies using the FXCORRELATOR Indicator :-

Ok - I have written literally hundreds of strategies for using my indicator over the last 20 years or so.

However the primary use of this tool is to get traders onto :-

THE RIGHT CURRENCY PAIR(S)
AT THE RIGHT TIME
IN THE RIGHT PLACE

In other words the primary use of this indicator (and any FX strengthmeter) is to ensure traders are only focused on Currencies and related currency pairs with the highest probability of delivering winning trades.

Now there are many interpretations of this - just as there are infinite ways of determining what is a good trading signal or pattern - however in this article I will reduce the criteria to just seeking Pairs with strong trend signals for ease of discussion.

so heres my indicator on a pair that is demonstrating a strong trend .....

(See attachment cable 1)

ok lets remove the other currencies just leaving the Green USD and the Red GBP.....

(See attachment cable 2)

Better ? - ok if you read the guides published above and look at my videos on youtube you will know that the ZERO dotted line on the indicator chart is very important to my trading ......it tells me that any currency index ABOVE the zero is showing bull and strong for the Moving average being used (default 20ma here) and any index line BELOW the zero is showing bear and weak.

can you see how this immediately provides more information than just the dumb and humble yellow 20 MA line on the chart ?

not sure ?....see below and how we can identify the OPTIMUM and powerful situations when both currencies are showing Strength and Weakness at the same time ......

(See attachment Cable 3)

In this simple strategy we should only consider looking for trades when the 2 currencies are on OPPOSITE sides of the ZERO ......as any other time the currencies are on the same side (either both Bull or both Bear) and NOT displaying strong enough BIAS to consider trading

from this basic benchmark a trader can begin to introduce their more familiar signals / patterns and other indicators that they use to trade the market. However by this simple method they will now be able to remove at least 50-60% of the 28 Currency pairs available to trade in the G8 and focus on the BEST opportunities.

This simple and basic Rule is the foundation of literally Hundreds of FXCorrleator trading strategies I have used over the last 20 years ...it is the building block for many i still use , alongside more traditional chart based patterns and indicators combinations

try it in any trend following strategy and see if it helps you start focusing on the pairs that are trending ....rather than your 2-3 favourite pairs (we all have them) that you trade continuously and follow signals loyally.....

REMEMBER THIS

when you decide to trade a currency pair without consulting the Fxcorrelator there is only a 27/1 chance you are trading the best signal

.......do you really want to take that risk ?

N
 

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NVP

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hey all ....

ok low volatility again today so far (well back to normal really until brexit warms up again)

euro and gbp are flagging sells .......usd is neutral ....swissie , cad indicating a little bull action

far too early to play as yet
N
 

NVP

Legendary member
36,506 1,833
ok

GBP and Euro are continuing to look bearish and cad has now come south (interesting combos)

Yen , swissie bullish ...and usd hanging bull now

so ive been trying to scalp Cable south and Ucad north....on EJ sells as well

got cable down from 2930s to 2920 now so far (getting better)
got EJ down from 125.40s to 125.20s now so far
got ucad up from 3440s to 3450s so far

but pretty grindy gang ...be careful
 

hatemypips

Well-known member
399 25
I am confused about synthetic currency pairs.

Lets say my account is in dollars.

Lets say you 'neutralize' doller and buy GBPUSD and buy USDJPY

So by doing this trade whether at the same time with the same amount or at different times with the same amount once the second trade is entered you are effectively trading the synthetic pair gbpjpy and buying it according to some websites.

However I don't agree because I have tried it and think that you are only exposed to the movement of gby as being in the one of eight currency pairs involving gbp so lets say 12.5% for argument's sake. Similarly, you are only exposed to jpy by 12.5% through the buying of usdjpy.

However were you to directly buy gbpjpy without being in the 'legs' to have been 'in' gbpjpy synthetically you would only be exposed to the currencies through the currency pair itself and not through the volume ratio of being in those legs of pairs to be in the synthetic pair.

Therefore it is different to trade gbpjpy outright than to assume that because you bought usdjpy and gbpusd that you can monitor your performance by looking at the gbpjpy chart.

The only thing to actually consider is that you would be double exposed to open a gbpjpy buy should you already have a buy on gbpusd and usdjpy or that should you sell gbpjpy one would be contrasted in their direction on gbp and jpy but only indirectly.

This is assuming, of course, that each of the eight pairs that make up the sentiment of a currency direction has a weighted ratio to that sentiment based on volume or volatility - I think the strength index in this thread could be viewed as an example of this.

It is quite complicated what I am trying to explain but I think the idea that you can trade a pair synthetically is nonsense because it eliminates the concept of looking at price action of the trades you are in and confuses me to think you can watch a synthetic pair at any point in time to gauge accuracy of a forecast of price.

I think the idea of synthetic pairs is genuinely therefore for institutions who would actually need to transact in the synthetic currency but through the use of legs for whatever reason, swaps, forwards, etc and therefore has nothing to do with speculation whatsoever and that if my analysis above is right then it can only be empowering to know that if you neutralize your exposure to a currency and are indirectly exposed to a 'synthetic' pair you are only exposed as far as the legs have exposure and that by entering the pair itself you are increasing or decreasing the exposure but it is essentially exogenous to those other variables/legs of exposure in so far that to be exposed to the currency and not the pair, being in three pairs is three out of eight exposure to one out of eight exposure. hope that makes sense.

The same can be applied to sellign EURCHF and buying NZDCHF etc etc
Why it has to work in efficient markets I still can't get my head around it.
 

NVP

Legendary member
36,506 1,833
I am confused about synthetic currency pairs.

Lets say my account is in dollars.

Lets say you 'neutralize' doller and buy GBPUSD and buy USDJPY

So by doing this trade whether at the same time with the same amount or at different times with the same amount once the second trade is entered you are effectively trading the synthetic pair gbpjpy and buying it according to some websites.

not exactly .....unless you calculate correctly you have to ensure you have bought the exact amount of similar units or ther will be a difference.........

However I don't agree because I have tried it and think that you are only exposed to the movement of gby as being in the one of eight currency pairs involving gbp so lets say 12.5% for argument's sake. Similarly, you are only exposed to jpy by 12.5% through the buying of usdjpy......... you also have to consider the secondary currency and the volatility of the pair in question....its exposure and volatility

However were you to directly buy gbpjpy without being in the 'legs' to have been 'in' gbpjpy synthetically you would only be exposed to the currencies through the currency pair itself and not through the volume ratio of being in those legs of pairs to be in the synthetic pair.

Therefore it is different to trade gbpjpy outright than to assume that because you bought usdjpy and gbpusd that you can monitor your performance by looking at the gbpjpy chart.

The only thing to actually consider is that you would be double exposed to open a gbpjpy buy should you already have a buy on gbpusd and usdjpy or that should you sell gbpjpy one would be contrasted in their direction on gbp and jpy but only indirectly.

This is assuming, of course, that each of the eight pairs that make up the sentiment of a currency direction has a weighted ratio to that sentiment based on volume or volatility - I think the strength index in this thread could be viewed as an example of this.

It is quite complicated what I am trying to explain but I think the idea that you can trade a pair synthetically is nonsense because it eliminates the concept of looking at price action of the trades you are in and confuses me to think you can watch a synthetic pair at any point in time to gauge accuracy of a forecast of price.

sorry at this point you have lost me ......theres nothing wrong with buying a basket of currencies across the GBP pairs if you like a direction of GBP.......you can do it on 3-4 pairs really to cover the odds...sure you could by all 7 of teh G8 pairs for gbp if yuo want to cover the odds ...but you have to be mindful of the ATR of each pair and weight accordingly

I think the idea of synthetic pairs is genuinely therefore for institutions who would actually need to transact in the synthetic currency but through the use of legs for whatever reason, swaps, forwards, etc and therefore has nothing to do with speculation whatsoever and that if my analysis above is right then it can only be empowering to know that if you neutralize your exposure to a currency and are indirectly exposed to a 'synthetic' pair you are only exposed as far as the legs have exposure and that by entering the pair itself you are increasing or decreasing the exposure but it is essentially exogenous to those other variables/legs of exposure in so far that to be exposed to the currency and not the pair, being in three pairs is three out of eight exposure to one out of eight exposure. hope that makes sense.

The same can be applied to sellign EURCHF and buying NZDCHF etc etc
hey there Moondude....see my comments above in Red ......so whats your point ?......can you explain again what you were trying to do and i will try to help - N
 

NVP

Legendary member
36,506 1,833
hey gang .....been busy this week but been scalping today

ok its been pretty slow today .......finally some afterburners came on for usd earlier and it started selling

got back into cable from around 2910/12 up to 2930s so far

euros got a little bull feel as well......

N
 

NVP

Legendary member
36,506 1,833
looking at the week ......

Yen and USD both had strong weeks up till yesterday ....looks like traders are taking profit into the weekend

AUD has been the main sell all week.....again getting bought now as traders come out of Yen and USD Aussie pair trades from earlier in week.......

see below
N
 

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NVP

Legendary member
36,506 1,833
hey all ....

just a quick look at the bigger picture on the G8 this year so far

the chart below shows the relative strength (approx in pips) of each currency since 1/1/2018

the main winners so far are Yen and USD it seems ......

Yen (yellow) was the Alpha buy in 2018 ...but has tumbled so far in 2018 (yellow) - its rallying though

USD (green) was ok in 2018 ...but after a little stumbling is now back at 2018 high levels and battering the resistance line (Green)
the greenback is on a roll guys and people are watching

GBP (red) had an annus horriblus in 2018 (like brown Cad)...but a decent 2019 to date ....most people here that follow my trading know that i am a big follower of Cable (GBPUSD) with the brexit twist its been my mainstay for a few years now due to its volatility and rich picking offerings if you know what to do and when to do it.....

other items of interest but i wanted to flag these 3 guys going forward

there are thousands of commentary sites and millions of experts selling traders their opinions on what happens next and what to do ...........but heres the truth

No one knows ..........no crystal balls ........no holy grail (despite what some traders tell you.....)

so find a trading system that works for you.....and test it .....and let the market tell you what its doing based on those rules ..........if you apply your system to the markets with intelligence and discipline (MM) and ensure your execution is 100% perfect every time...........then you will ultimately be a sucessful trader ....I promise you....

if you are trading forex - forgive me for being a little bias in saying that with 28 currency pairs available on the G8 ....you really need to consider using a forex Strengthmeter (like my fxcorrelator) in your approach to ensure optimum currency pair selections......why be trying to trade the pairs with the least profit potential ?

have a good day .........
N
 

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NVP

Legendary member
36,506 1,833
morning all

early days at moment .....if i were going anywhere its a strong Cad ...rest is sloooooooow
 

NVP

Legendary member
36,506 1,833
ok i got on cable earlier as GBP finally got bullish......only pair in the house for action at moment

took in 2940s up to 2990s so far

no complaints
N
 

NVP

Legendary member
36,506 1,833
hey all ...after a tricky start the europeans have been the buys ....GBP and CHF been best bests so far ...im scalping off USD bear .....cad is very weak .....

3040s was sweet spot to hit cable .....been to 3070s so far