Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

Sorry All

Laptop has got virus again

Will get it fixed tomorrow

N

 

[NVP]

Laptop still in surgery......fingers crossed

More later

N

 

[NVP]

hey all

ok laptop back in good health.....

heres the week ..early days and I like to see 1 rotation of all the major timezones to settle the markets into a new week ...so we are still in the US session (rotation 1) of the week

the only currency of interest already is the (orange) AUD

its the only diverging currency on the left chart daily 20ma (look for it)...and is naturally peeking north on the right chart as well....just behind a bullish red GBP (weekly chart on a 1ma Xmen)

more tomorrow as things warm up
N

 

[NVP]

hey all

heres Tuesday early days.....

Yen and GBP(still) are leading the week .....CAD is the dog.....(right weekly chart)

i was watching AUD yesterday but it is slowing ....CAD is now on my radar as leading sell ....and both USD and Yen now both north (left chart) has to be the buy at present

so these pairs would be the call at present .......although i would prefer a falling dow

N

 

[NVP]

Hi Everyone

apologies but Workload is keeping me from regular updates presently

I will update and respond to question on this thread as and when time allows

N

 

[banawa]

hello
what happen to you long time never heard hope you are fine i used to be you favorite follower have you make improvement on the FX correlator or still the same but loved so much no problems very happy with it

 

[NVP]

Hey banawa

I hope you are well ........the FXCorrelator core indicator here remains the same as ever ......it is there to reflect the forex market using the settings a trader feels happy and comfortable with

I have changed my updates a bit and now comment on daily movements on a 20ma as it would take to much of my time to comment on lower TF's

privately my Strengthmeter testing and research always progresses..... as there is so much to be learnt about this facinating approach to trading forex .....

best wishes
N

 

[NVP]

hey all

heres wednesday ......a big push north on the Dow has finally stopped the Yen and USD's bullish progress ........as I said earlier in the week I ideally like to see a falling Dow if the Yen and USD are bullish....so conditions have not been perfect

if the dow stays rampant go to selling USD and Yen ......looks like the NZD and a continuing GBP are picking up those buy pips so far ....

N

 

[NVP]

mornin all

not much change on yesterday......dow is stalling a little

cheers
N

 

[Purple Brain]

Hi NVP. I’ve been using your correlator for a while and find it a very useful tool. As with all tools, they have a specific purpose and after using them for a while you become better acquainted with what they work best with and for and where they are less well suited. I’d appreciate your views on the following as I’d hate not to be squeezing everything available out of all your hard work in this area.

Correlation tells you where you are right now with regard to relative strengths of the currencies being analysed. If they support a current trade that’s generally good news for the major part of the move you’re in. However, what these correlators will not do is get you in at the beginning or out at the end. If you’re a trader that looks for pullbacks to enter then you’re typically getting in when the correlator is telling you to do quite the opposite.

And when all is looking smooth sailing while in a trade, the correlator, due to the lag inevitable with any moving average based indicator, will be looking good for longer than will your trade.

This isn’t a criticism at all of the utility, but just an awareness I now have that the entry is generally contra the correlator and I need to be looking for an exit even when everything is looking rosy and especially when it’s looking really rosy. You need entry & exit criteria operating independently of the correlator.

Do you agree with this or am I missing a vital aspect of the analysis?

 

[NVP]

mornin all

the ECB's decision yesterday naturally sent the Euro through the floor

aside from that the GBP and the NZD have been the pretty solid buys this week

later
N

 

[NVP]

Hi NVP. I’ve been using your correlator for a while and find it a very useful tool. As with all tools, they have a specific purpose and after using them for a while you become better acquainted with what they work best with and for and where they are less well suited. I’d appreciate your views on the following as I’d hate not to be squeezing everything available out of all your hard work in this area.

Correlation tells you where you are right now with regard to relative strengths of the currencies being analysed. If they support a current trade that’s generally good news for the major part of the move you’re in. However, what these correlators will not do is get you in at the beginning or out at the end. If you’re a trader that looks for pullbacks to enter then you’re typically getting in when the correlator is telling you to do quite the opposite.

And when all is looking smooth sailing while in a trade, the correlator, due to the lag inevitable with any moving average based indicator, will be looking good for longer than will your trade.

This isn’t a criticism at all of the utility, but just an awareness I now have that the entry is generally contra the correlator and I need to be looking for an exit even when everything is looking rosy and especially when it’s looking really rosy. You need entry & exit criteria operating independently of the correlator.

Do you agree with this or am I missing a vital aspect of the analysis?

Hey PB

Thanks - a worthy and correct interpretation of the Free Strengthmeter I offer here to T2W members

an MA based strengthmeter does exactly what it does on the tin........it presents a rolling snapshot of the relative strengths and direction of all the individual instruments within the sample.......in this case the G8 currencies

the Ma setting allows you to vary the View you want to see......is it for the last 20 bars (20ma) ?..... or do you want to see the relative strengths/direction of the G8 for the last 200bars (200ma) ? ......

similarly do you want to know this for the 5m TF ...or what about the daily TF ?

perspective perspective perspective.....:smart:

there is no better tool for bringing Market perspective to the G8 currencies (28 currency pairs) on 1 chart ........sure 8 lines are busy on a chart...... but I've seen busier indicators on T2W !

and as I state a lot of the time ....MA's are the building block of many systems .......but they sure aint perfect..:innocent:....and you need to respect its weaknesses as well as its strengths ....

the first rule in any situation is to understand where you are right now in relation to market dynamics and activity ..........for without knowing where you are now you really cannot decide the possibilities/probabilities of where you will go next .....

more to follow in answering this excellent question ....but i'm tied up now for a while ...:smart:

N

 

[NVP]

I will not be at the world moneyshow tomorrow now ..............sorry all but I have had to cancel due to workload and some other priorities

it looks pretty light on forex tomorrow anyway

N

 

[NVP]

here we are as the week slooowly winds down....

E/G Sell is the best move I can see there at moment ..........E/U is similar.......(sometimes that weekly middle chart is a little distorted - long story)

anyway a lot of pairs with similar pippage for the week ........pathetic and has been a tough week ....with net moves of less than 150 pips for most pairs .....

later
N

 

[NVP]

Hi NVP. I’ve been using your correlator for a while and find it a very useful tool.

Correlation tells you where you are right now with regard to relative strengths of the currencies being analysed. If they support a current trade that’s generally good news for the major part of the move you’re in. However, what these correlators will not do is get you in at the beginning or out at the end. If you’re a trader that looks for pullbacks to enter then you’re typically getting in when the correlator is telling you to do quite the opposite.

And when all is looking smooth sailing while in a trade, the correlator, due to the lag inevitable with any moving average based indicator, will be looking good for longer than will your trade.

Some final points re PB above .......(see my earlier 1st response)

I toally agree with the above........my FXCorrelator on the standard 20ma setting will always lag the market ............any MA based system will lag the market .......sure its a weakness if you look at it that way ...........but nothing is perfect

the most important thing to remember in trading any market is that you will never create a perfect trading system......the best you can do is create a tool that

1) is aligned to your own personal preferences for trading
2) is designed to present the market to you so you understand whats happening
3) is designed to allow you to make trading decisions for entry and Exit

The systems here are merely introductions to Strengthmeter trading ......I also sprinkle in a little intermarket correlation discussion.....and always urge people to research this fascinating area further

in my own research I have to admit I am using very advanced derivatives of the stuff I offer here ..........thats not being big-headed ........its just the process of grinding hard work and being helped by very talented traders and programmers for the last 11 years .......

everything I do these days though is still related to the core principles of trading Strengthmeters and what I show on my simple 7p chart below.....

one day I will publish some of my new work and start to have more time to teach and help others if they want it ........but thats drifting into the Vendor world again ....and I am not a Vendor at this moment :smart:

Cheers
N

 

[banawa]

thanks

Hey banawa

I hope you are well ........the FXCorrelator core indicator here remains the same as ever ......it is there to reflect the forex market using the settings a trader feels happy and comfortable with

I have changed my updates a bit and now comment on daily movements on a 20ma as it would take to much of my time to comment on lower TF's

privately my Strengthmeter testing and research always progresses..... as there is so much to be learnt about this facinating approach to trading forex .....

best wishes
N

thanks again nice to see you doing well all the best

 

[NVP]

mornin all .......

heres the position using my 2 main charts

• Daily on a 20ma
• Weekly X-men on a weekly 1ma

the main move in last 2weeks was the E/U sell........over 400 pips in fact

lets we what the week offers.......too early at the moment ........:smart:

N

 

[NVP]

Jedster .........thanks again for all the hard work ........I will get back on this stuff ASAP

cheers again dude....
N

Best damn Trader/Programmer I have ever met .....(but dont tell him that :whistling)

 

[hybrid]

NVP / Jedster,

do either of you fine chaps know if the indicator could have a problem within an MT4 platform that has the 'funny little sunday candle' ? I ask this as the indicator appears blank in some platforms and this 'seems' to be the deciding factor.

thx in advance, and keep up the great info.

 

[NVP]

hey all ....jees its busy at work today

will get to charts at some point I hope

N