Best Thread Correlation Trading - Basic Ideas and Strategies

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
 
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.
 
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
 
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
 
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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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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morning all

early days at moment .....if i were going anywhere its a strong Cad ...rest is sloooooooow
 
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
 
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
 
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
I am struggling here all your comments are after its happened which we can all see
 
Hi there J ...

I dont live call here anymore that much as theres not as much traffic as there used to be ...I used to pull 30+ viewing most mornings when i was calling on trade2win and a lot more on Forex Factory I remember

I think ive had over 2.3 million views now here on this thread

I'm not allowed to say where i live call as that would be deemed soliciting by the Moderators

read the links below and i have a youtube channel and other mediums that become apparent

always happy to talk strengthmeter trading to people if they are curious

N
 
hey all......

been busy trading and doing some coaching as well .....not really had time to post much at all on mainstream forums today

for those scalping the moves have been pretty solid today so far

London session saw GBP pretty weak so some nice sells there against anything really
CAD , USD and Yen prevailed as Bull plays .....

US session has seen a big change around .....GBP swung some 50 pips bull so far on main pairs ....it will have taken a while to accept that move ....it did for me ......

USd has swung some 40 pips south from london highs .......

so cable has swung north some 90 pips since london lows of say 2990s so far ....

i was comfortable getting bullish on cable around 3010 levels ...so 60-70 pips of pretty plain sailing for pm session london time

CAd just kept coming north ...nice moves ........to 30+ pips from 6am london

all happening again as i speak as GBP really coming back north even harder ....

have a good weekend

N
 
hey gang .....im working on my house this week .....cant get around it .....

may get trading room back up again by friday

N
 
what a week ......

i'm covered in paint 24/7 and my house turned into an edition of DIY SOS (7 vans and 10 builders on site was my record on wednesday ! )

despite my brave and valiant attempts to trade everyday I've had to capitulate and just help get the work completed this/next week

i'm also under threat of death from my wife ....who has now been living away from the house for nearly 3 months !

week-wise.... it was relatively stable / undistinguished : -

GBP (red) took progressive bear hits each day ....and not even a small rally on Friday (ominous sign ?)
JPY (yellow) took some nice bull action through week - holding on Friday

both currencies above pretty much mirroring their respective bull/bear pip moves whilst the rest of the G6 played tourist in relatively small ranges

so hats off to the GBP bears / JPY bulls out there ....you made the bucks whilst others that did not play here were left with slime picking indeed

remember ...the FXCorrelator enables trader to find the trending currencies quickly and easily ......why trade pairs that are not moving ? ....tradings hard enough as it is !

have good weekend ....i'll be covered in paint......as usual !

N
 

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i must say the G8 market has quietened down since UK got the brexit extension....shame

so far since around 6am today the market is very quiet .....only the swissie and yen have been rocking

GBP is comatose so far

so USDCHF one of the primary pairs to trade today ....so far some decent action / signals from around 0104 down to 0070s

sloooooooooow though

N
 
hey gang ....still snowed under with house renovation.....

in my youtube video at weekend i was warning that GBP was ominously weak coming into the weekend indicating more pain to come .....i was not wrong

170 pips south so far ...ouch

N
 

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usd is flat so far today .....makes me nervous about playing cable etc

since yen has been so bullish this week i like trying to get on it ....and i like EJ for scalping purposes

soooo..........this morning we have yen in bull action again .....

been hitting EJ below 122.60s ........its sold off to 122.44/45 so far so hard work

nothing else firing off as yet ...

N
 
so EJ been to 122.32 now ....a few crumbs along the way .....

USd has finally got north earlier following yen up ......been selling GU from around 2770.......i was a little hesitant on any earlier as GBP was really pulling back .....thought it was going to fake me .....

2753/54 so far .......

long morning ....hard work

N
 
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