Best Thread Correlation Trading - Basic Ideas and Strategies
NVP
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NVP
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hey P
good question.............actually in my experience its the Yen that seems to move the most predictably and negatively to the dow and the common explanation for that is what they call the carry trade where traders use the zero yielding Yen to fund more higher yielding products (research it as theres plenty of info out there)
usd seems to come along for the ride most of the time so I group it with the yen, the usd is not so simple an explanation as stictly yield......but it is the Global Anchor Currency representing safety,liquidity and security so it pretty much ends up behaving in the same way :whistling
then its a simple numbers play as if i've got these 2 guys moving in the same direction , look to trade anything thats moving n the opposite direction
a few more twists as i explain here occasionally but thats why............also the CHF is regarded as europes safe haven currency so that should move with the Yen and usd more when certain circumstances arise.........:smart:
N
NVP
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hi all
a quick post then i'm gone.........
ok I apologise 100% ................these charts must look like the roadmap of London but I do not have the luxury of real time vidoes or Trading chatrooms to call them as I see them........
however the point is you should be able to see when things align ....especially the Dow above/below all 3 ma's and the tag team below/above the Zero lines here on the 80ma and 20ma chart
thats the Flashing light and time to trade 👍.......sure there are screaming opportunities outside of this if you bend the rules but thats up to you !!
i'm here to offer some free advice and observations on market correlation and strengthmeter dynamics
so not bad at all here with the last Euro sell recently as the cream of the crop 👍
N
a quick post then i'm gone.........
ok I apologise 100% ................these charts must look like the roadmap of London but I do not have the luxury of real time vidoes or Trading chatrooms to call them as I see them........
however the point is you should be able to see when things align ....especially the Dow above/below all 3 ma's and the tag team below/above the Zero lines here on the 80ma and 20ma chart
thats the Flashing light and time to trade 👍.......sure there are screaming opportunities outside of this if you bend the rules but thats up to you !!
i'm here to offer some free advice and observations on market correlation and strengthmeter dynamics
so not bad at all here with the last Euro sell recently as the cream of the crop 👍
N
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NVP
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montmorencyt2w
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If you don't mind my chipping in here Neil, to add to what you said in reply to pbylina's question on the Dow and the tag team:
As you know, I have been following Ashraf Laidi for a while, and I think he would say, crudely paraphrased, that when risk appetite is going up, the Dow (and usually the other stock market indices) tend to go up. The USD and the Yen are seen as "safe-haven" currencies (at least compared to the stock market), so when risk aversion kicks in, the stock market tends to go down, and the USD and Yen tend to go up.
Now, that's grossly oversimplified compared with the real world, and I wouldn't make trading decisions based on it, but it's just worth keeping in mind. Sometimes the inverse correlation of USD and stock market will go out of the window. Ashraf will usually draw attention to this on his website or on one of his video clips (which seem to happen at fairly random intervals), and it's interesting to hear his reasons in any particular case. The other "safe-haven" instrument is of course gold, and there is often an inverse correlation between gold and USD (USD priced in dollars of course), but not always. Maybe it's worth asking yourself why, when the expected correlations break down. Not always easy to answer though. Something that Ashraf is very keen on is the Gold/Oil ratio, which he seems to regard as a fairly critical indicator, possibly a leading indicator. Unfortunately, I couldn't really tell you how to use it offhand. There are (or were....they get archived) articles on his site which talk about it, and his book talks about it, but if I remember correctly, doesn't really help you make any trading decisions based on it.
.....Just had a quick flick through the book (Currency Trading and Intermarket Analysis) and I can't find any quick summary of the usefulness of the Gold/Oil ratio ... it's probably there somewhere, if only implicitly. It is not a how-to-trade book, by the way, and it's a bit dry, to be honest, as well as being in need of an update. Nevertheless, I'd recommend it to any FX trader who wants to look beyond a purely TA approach.
As you know, I have been following Ashraf Laidi for a while, and I think he would say, crudely paraphrased, that when risk appetite is going up, the Dow (and usually the other stock market indices) tend to go up. The USD and the Yen are seen as "safe-haven" currencies (at least compared to the stock market), so when risk aversion kicks in, the stock market tends to go down, and the USD and Yen tend to go up.
Now, that's grossly oversimplified compared with the real world, and I wouldn't make trading decisions based on it, but it's just worth keeping in mind. Sometimes the inverse correlation of USD and stock market will go out of the window. Ashraf will usually draw attention to this on his website or on one of his video clips (which seem to happen at fairly random intervals), and it's interesting to hear his reasons in any particular case. The other "safe-haven" instrument is of course gold, and there is often an inverse correlation between gold and USD (USD priced in dollars of course), but not always. Maybe it's worth asking yourself why, when the expected correlations break down. Not always easy to answer though. Something that Ashraf is very keen on is the Gold/Oil ratio, which he seems to regard as a fairly critical indicator, possibly a leading indicator. Unfortunately, I couldn't really tell you how to use it offhand. There are (or were....they get archived) articles on his site which talk about it, and his book talks about it, but if I remember correctly, doesn't really help you make any trading decisions based on it.
.....Just had a quick flick through the book (Currency Trading and Intermarket Analysis) and I can't find any quick summary of the usefulness of the Gold/Oil ratio ... it's probably there somewhere, if only implicitly. It is not a how-to-trade book, by the way, and it's a bit dry, to be honest, as well as being in need of an update. Nevertheless, I'd recommend it to any FX trader who wants to look beyond a purely TA approach.
NVP
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good points mike and interestingly the black swan guys talked oil and gold recently here.......
http://www.trade2win.com/boards/for...g-basic-ideas-strategies-687.html#post1408724
I do follow potential trades on oil and gold as well and will look to go in if I see the usd index (from the FXCorrelator) rising or tanking as this naturally will affect the attractiveness of the standard traded gold price in US dollars and or oil
Regarding my beliefs on Wider market correlations ........I am a big believer in the Yen / Equity markets Relationship , then I see the USD trend pretty closely to the Usd day in day out ...............and then to be honest i'm not fussed on any further correlations or using them much
I've got a few Goldmeters knocking about as well as it is the 9th currency after all ...........and can be sometimes useful fo me to see just how strong Gold is against a basket of currencies (including the usd) but nothing more technical than that
hmmm - I might go back and peruse the guys work as I havnt for a while :smart:
N
