Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

I shouldnt be doing this....but !

ok everything is screaming at me not to call this trade as the tag team are
very misaligned and it looks like a barbrawl on the 5min Chart !

however if we were to stick to basic principles we pick currencies in the anti-tag group
and trade them against the Tag team (Yen & USD)

so I think that Euro has peaked as it is now consolidating and USD looks low (!!??)

so if Euro starts falling below the grey line i'm Selling Euro and buying USD expecially if USD starts rising above its Grey line .....:whistling

but NVP....why arnt we just selling Yen and buying dollars re the mega Divergence ?.....I dont know

N

 

[NVP]

you know whats coming dont you !!!!

back home now.......wow If only every trade call was this perfect !

Luck or Judgement the 2 potential trades I called in my last post delivered

Euro fell, USD rose....and as a bonus ball the Yen didnt do much so we could have made dinaros on the USDJPY convergence as well (Buy USD/Sell Yen)

Left chart is 5min corrie (200/1), middle was 1hour corrie, and on the right are the
EuroYen and Euro dollar pairs........the Yellow verts are where I called it earlier
today

lucky ?........I have a feeling the better we get to know mr Corrie the luckier
we are gonna get

Go to my home page for a copy - I need some participants here calling the trades and learning with me...

you think this is good?...wait till Ingot54 rolls his sleeves up (no pressure Ivan!)

N

 

[alan5616]

Intriguing

Hi Neil,

You've done a great job in putting this together. It's fairly complex but, seems to have a lot of potential. It, certainly, puts a whole different slant on trying to use TIs + pure price action.

Thx

Alan

 

[alan5616]

Hi Neil,

I'm burning the midnight+ oil, going through yesterday's action, on the pairs that I watch, and bringing Corrie into the equation.

One observation, not a criticism, is that Corrie is excellent at keeping you out of poor trades but, can keep you out of even more very good ones. I've played around, a bit, with the input settings but, can't improve on those that you have. Well, not unless I want a modern art painting on my screen. I've been down to the 1 min as well.

There's no doubt that this could be a very valuable trading tool but, I think, a few more tweaks are needed yet. I'll do my best to make some positive contribution. I'm retired so, if you need some extra manpower for testing, let me know. I do trade, theoretically, full time but, don't want to be watching charts all day. Usually, I can make my day's profit between 06.30 and 9.00.

On the mattter of Currency ID, you might want to consider changing the CAD colour from brown to purple. It makes it so much easier to distinguish from the £ Red, especially, when they're crossing over quite a lot.

 

[NVP]

Thanks Alan !

Hi Alan

Thank you for your excellent points......any contributions on here are appreciated + please feel free to make any calls when you see them !

Yep - The CAD Brown is close to the GBP red - good point !

Someone mentioned in an earlier post asking what this indicator actually was (Technical, Correlation ?)....well to be honest I think it just is what it is....so lets see what we can all collectively bring to the table re using it

Thanks again and welcome !..ps get some sleep !

N

 

[alan5616]

Hi Neil,

I didn't turn in until 03.30; not good when I'm playing in a Seniors Open golf comp today. I'll, probably, not be playing too well.

As I was off to bed, I noticed that ALL currencies were above the 0 line (5 min tf), except the AUD. I've taken the NZD off as, I can't get this on my Alpari data feed. I'm certain that there is another angle, here, which may add something to Corrie's use. It may be drawing TLs but, that's just a shot in the dark.

I'll look at it some more later today. Have a good day

Alan

 

[NVP]

Data Feeds for corrie

Hi Everybody

I must confess I have even less idea about the IT/Technical side of setting up your Trading than I do about actually trading.....

just to help/repeat.....I signed onto a Demo account years ago with ODL and got the metatrader platform.........it does feed me the NZD so looks ok

The Indicator works on calculating all 7 major currencies vs its USD pair so it does need data from all to show the lines correctly on the chart compared to my examples

Alan we may need to drop the NZDUSD off of your version to get it showing ok (?)

N

 

[NVP]

Testing Testing.........

Hey Alan - all

Heres my corrie for early hours today......yep our Antipodean friends both took a stroll on the south side unaccompanied by the others...

the AUSD was such a a big move that it skewed almost all other currencies into positive (above the Zero Line) Territory.....

Money made across the board selling AusD against everything else.....ive shown the move on the AUSJPY pair which actually was not the best even....Euro & Swissie gave best bang for your buck this time around as they were top of the pile through most of the night

what did the roos's do ....lose the ashes or something ? :cheesy:

(sorry Ingot54 - couldnt resist !)

N

 

[NVP]

afore I go.............

ok busy busy .......before I go may as well toss one in the Fire

Sell Euro / Swissie
Buy Yen / USD

based on lines below

game on.....

STOP PRESS - its happening so give it room to breath re stops on your favoured pairing !

N

 

[NVP]

9.46am.....what a scrap !

Hi all

they are in combat mode alright !......i'm hoping that the Euro and Swisse finally start to tire a bit after their overnight successful run........

this is where people would now be using their own technicals to initiate
the trades (or not)

come on !!!

N

 

[NVP]

10.28..here she goes

Fingers crossed...........

DAMN.........I was eyeballing that Euro GBP Gap/divergence
earlier....to late now missed it

N

 

[NVP]

10.57.....this is the problem

Hi all

classic example of deciding what to trade and realising the consequences of it

Swissie is a loss.........and while we are sitting on our hands willing the Euro further downwards to eek out a meager b/e (yen and Dollar are nicely moving up now) the GBP is offering lovely smash and grab Trades !

look how it rose to hit the (already rising) Yen and USD lines, then bouncd back down again............cheeky pips were on offer..........

oh well.......back to the EuroTrades.....

N

 

[NVP]

Folding..........

doesnt feel right...

not calling Euro "sell" vs Tag team buy...so game over

N

 

[Ingot54]

Longer term set-up

Hi all

classic example of deciding what to trade and realising the consequences of it

Swissie is a loss.........and while we are sitting on our hands willing the Euro further downwards to eek out a meager b/e (yen and Dollar are nicely moving up now) the GBP is offering lovely smash and grab Trades !

look how it rose to hit the (already rising) Yen and USD lines, then bouncd back down again............cheeky pips were on offer..........

oh well.......back to the EuroTrades.....

N

Hi folks

Just trying to catch up and get back into this thread after compassionate leave, kindly granted by our mentor.

Just attempting to find a nice trendy pair to hit tonight. Most of the fast action seems to have subsided now, but a nice trend seems to be indicating on the 4H chart of EURAUD.

I can't help myself - I was never a purist, but tonight I have left the 5.3.3 stochastic and my trend-power indicator (the MTF ADX).

But for your viewing pleasure, feast your eyes on this little fella!

Nice pull-back on the 5 min trendpower ADX, and the stochastic is crossing north nicely. I have deleted most of the other currencies so as not to muddy the waters too much.

It seems this 4H trend has legs tonight, as the AUD is under fire from all quarters - unemployment figures seem to be the culprit, coupled with the news of China's end to commodity buying.

Have to run - but let's see where this one ends!

 

[NVP]

Welcome back Ingot54 !

good to see you fella..we missed you !

heres my thoughts.......i'm not a Long TF player but the corrie is multi TF so its all the same to me !

The EUROAUS is looking a classic Breakout trade (Euro crossing the 200MA) and theres plenty of airspace for Euro to climb into.....overbought levels for me on the 4h are in the 0.0040-50's range and that grey horizontal line is only at 14 !

I also like the (Sell) AUSD (Buy) USD potential here...especially if gold starts folding from its $1000 triumph....

N

 

[NVP]

Mr Expert.....what do I know ?

post #153 doesnt feel right...

not calling Euro "sell" vs Tag team buy...so game over

N

DOH !!!!!

someone hit me with a stick...please !
N

PS - hmmm.....big gap forming on GBP vs the Swisse/euro and that blue Hor line is the overbought level for the 5min TF....Sell GPB buy either ?

 

[NVP]

Roundup on Euro Sell Tag team buy.....no cigar ?

Hi all

Since this has not been a wonderful call I will use it as a learning point re how
currency pairs move.

Lecture time.......

Currencies are identified in Pairs by markets pricing one currency against another

The Behaviour of the Pair Price is shown on Charts....flowing up and down

However - a Currencies true Personality can only be observed by combining its seperate charted pairs (7 of them for each major) into 1 chart such as the FXCorrelator.....The corrie "brings currencies to life"

So when you observe a Pair Trading the price movement is based on the sum of the 2 currencies different behaviours.....not just the 1 pair you are looking at

Ergo the picture below.......I said Sell Euro and buy either Yen or USD....now one held ok and one failed.......but why ?

The Euro call was ok....it held flat then fell so ok.....The Yen was ok as it rose.......the Corrie shows you that it was the USD that was the problem...it fell faster than the Euro and therefore was the problem.....hey 2 out of 3 aint bad !

The Corrie teaches you to look at each currency on its own merits and then decide what to do....if a currency is displaying a nice trend see what there is to trade it against and if nothing springs to mind then dont Trade !

This is the secret as many times 1 currency will be screaming its intention...but you have to find a decent opposing Currency to optimise that edge.....hence sometimes you can look at multiple trades that optimise the outcome OR for certain Currencies trade something else that correlates to the currency signal being given eg :-

for a Good USD signal on Corrie - Trade Gold in opposite direction
for a Good signal on Yen - Trade US stock market in opposite direction
....Plus there are others but these ones generally work best

but riddle me this readers.....does the US Stockmarket rising tend to crash the Yen or
is it the falling yen that boosts the US Stock markets ? ....:|


here endeth the lesson :smart:

N

 

[NVP]

is it me ?

do you ever get the feeling you are missing something ?

ive talked about a few currencies today....Euro,Yen, swissie and even the USD whilst trying to make a buck or two in this tough old trading world...

Heres what we do tomorrow

take a 5 year old Child (not a 50 year old F*rt)

Explain what nice colours mean on chart

Explain that pointy ups and high ones = buy those lovely colours

Explain that pointy downs and low ones = sell those nasty colours

then let them look at the chart and tell us what they see..........and perhaps they might
just spot the red GBP kicking butt most of the day ...(unlike me!)

childs play !!

N

(note - in all seriousness this is upper stratisphere for the GBP as not much gets above the Blue line that often so perhaps I could be excused...?)

 

[Ingot54]

There is no problem - it's all good.

do you ever get the feeling you are missing something ?

ive talked about a few currencies today....Euro,Yen, swissie and even the USD whilst trying to make a buck or two in this tough old trading world...

Heres what we do tomorrow

take a 5 year old Child (not a 50 year old F*rt)

Explain what nice colours mean on chart

Explain that pointy ups and high ones = buy those lovely colours

Explain that pointy downs and low ones = sell those nasty colours

then let them look at the chart and tell us what they see..........and perhaps they might
just spot the red GBP kicking butt most of the day ...(unlike me!)

childs play !!

N

(note - in all seriousness this is upper stratisphere for the GBP as not much gets above the Blue line that often so perhaps I could be excused...?)

Hi Neil

I think you are doing an excellent job with this topic and with this thread. You are carrying it very well, so don't be getting the hair up on the back of your neck over a couple of trades that didn't go to plan.

Look at the ones that did work out mate, and take a bow.

At this minute I am at work, so only have Bloomie to check currency prices. I can see that my 4H trade is well below its opening price too, so I would imagine, had I given the full parameters of the trade setup - SL and TP etc, I would probably be staring at a stopped out trade now, or an early profit - can't tell.

What I can see is that many setups appear, but few represent really good trades. I took a punt tonight (my time) because I just wanted some action - not a good way to build a nest egg - punting is doomed to bring pain eventually.

But even a punt can be profitable, or painless, if managed correctly. Perhaps that is one aspect we could focus on at some point.

I have found that I do best by following the advice in my own footnotes - don't look back, and stick to one thing until you get there. Unfortunately I am prone to the same whims as anyone else, and have to exercise discipline in my behaviour too - it is lack of discipline that makes me take "hunch" trades.

Ideally with the Corrie, I have found that if I wait until one of the pairs is well overbought/oversold, then the ride back to the middle of the pack (perhaps the zero line, but rarely) is the safest trade of all. Some call it "mean reversion" and it is a phenomenon that all currency pairs exhibit.

Maybe we can get some structure into the way we use the Corrie - at least on the thread - by waiting for the best trades, and trading them well. In time I hope to post a few more of mine - with better results than I have so far.

The other way to trade, is risky - and that is to pre-empt the convergence and divergence of pairs from early moves. A percentage of these fail, but good management and a willingness to cull trades that do not perform, will put us in the money, as the early entries do indeed go on to make their runs.

The Corrie is one of the better indicators, and very few forums dare to discuss Currency Correlation Trading.

The boldness with which you have opened up correlation trading on T2W is commendable, and I for one am very grateful for it. It is refreshing - and for me - it works.

Let's kick some butt!

Bring on the trades!

Best wishes - Ivan

 

[alan5616]

Hi Neil & Ivan,

For my style of trading, the shorter tfs are more suitable. The 5 min suits me just fine.

I think it's possible using Corrie, combined with price action, to make some nice profitable trades. One of the keys may be not to get greedy and be content with 20 pips per trade. One of the hardest things to determine is whether a particular pair has reached it's maximum divergence and will then reverse positions. I'm not a fan of o/b-o/s indicators; they can be very misleading.

The risks, in using Corrie, as a stand alone, are apparent. Often, one pair will be above/below 0 together yet, the price difference between them has increased/
decreased quite considerably. The other difficulty is that Corrie 0 line divergence, frequently, doesn't occur until a price move is well underway and reaching exhaustion of the move.

My reason, for pointing out Corrie's weaknesses, is that I believe, if those weaknesses can be eliminated, then this is something that will prove to be a real asset in trading.