Best Thread Correlation Trading - Basic Ideas and Strategies

[NVP]

Tom Yeomans

I have a lot of respect for this guy.....so see attached below

(Tom I will take the commission in my bahamas account )


http://twitter.com/Canadiantom

I thought I would post opportunities I come across through Twitter for Silver and Forex this week to find out if this is a good venue for what I am going to be doing this winter. I want to post currency meter updates on the strengths I record for most of the majors. I usually monitor from early NY session into the lunch hour.

Hope you join me this week.It's free. I will be improving the page and adding more as the week goes on.
tom-

aka
canadiantom / Long Tom Silver

N

 

[NVP]

GBP is falling nicely now..........

Tag team have been consolidating/flat for a while (the middle 5min chart)....but luckily the GBP (red) sure knows the direction it likes now.....

N

 

[NVP]

copies released !

Hi Gang

Ive just released the copies as promised to the interested people...

please start posting questions and commnents , observations and we can get some good discussions going on the corrie plus what the markets are doing correlation wise.....

theres a simple indices verison ive released as well so we will see that hopefully soon appearing more

to everybody following this thread, please dont be shy to post anything re correlations or questions and we will try to answer

I'm taking requests for next release - so contact me at [email protected]

thanks again and good trading !

NVP

 

[NVP]

corrie Back to basics

so I would recommend the team start here...some eyeballing at the high Ma settings to get comfortable.....

any TF works but practice is obviously best on 1 and 5 min TF's where the action can be fast and furious........perhaps 5 currencies to leave on charts ?

for practice try to post some 5 min piccies with comment and S/R lines to trade if they
are broken....:smart:

theres been 1 major move this morining around 5am on my chart shown which actually is 6am GMT
would we have traded it ?...dont know as I wasnt awake and false signals are plentifold......

the idea of this thread is the supporting signals.....look ar higher TF's ?....did the other markets support the
rise of the tag team ?......did the cat at number 22 fall off the garage roof at this moment ? :cheesy:

N

 

[NVP]

INTRODUCING the indices correlator

hi team

Heres the other member of the team...see the comments below

this is a much more simple model and has had less work , research on it so far

because these markets close it messes the averages so longer TF's are more pertenant and you need to keep the Ma down lower to pull in the values....London PM would be pulling live feeds from all

170/3 is fine......I would not bother with trying to get support for that trade in post above at 5am unless I had futures feeds for the indices (and I dont ....I think ?)

I do know that my WS30 feed (S&P) is a futures feed so that is 24/7 and relevent... and naturally the Yen and USD are fine as well.............mine is an ODL version that has no treasuries unfortunately

in a perfect world I would like (all futures feeds)

USD / YEN + S&P / FTSE100 / DAX / GOLD / OIL / US TRES and perhaps an AAA corp bond indice........all on 1 chart....that would be interesting to see the correlations !

comment on below

Look how the S&P (Gray) lead the DAX (blue) and FTSE (red) into some falls in early part of Chart (oct 20th)
and then brought them back out around 2-4 november)....that was also the most meaningful moves for the Tag team in opposition....(they are generally falling at the moment in response to those Stock rises with the commodities already elevated)

hmmmmmmmmmmmm

N

 

[NVP]

Post 11 repeated

Meet the family

Sterling (Red)
Volatile little varmit, mainly “hates” (ie negative correlation) the Yen and USD$
Not absolute friends (ie positive Correlation) with anything else (in my humble opinion) perhaps is more friendly and runs with the European Currencies than anything else – but much more Volatile so don’t get bitten !
Non Forex-wise any relationships it has are probably due to its negative
correlation to the USD$ and the Yen – so refer below to those comments

Euro (Blue)
Lower volatility than most again I would say, primarily “hates” (ie negative correlation) the Yen and USD$. Its best chum (ie positive Correlation) is the Swissie and they go most places together in my opinion.
Non Forex-wise any relationships it has probably relate more to its Negative correlation to the USD$ and the Yen – so refer below to those

SwissFranc(Grey)
All said above in the Euro comments …Swissie (in my opinion) demonstrates
lowest volatility levels of all the Majors most of the time…useful for trading against higher volatility currencies

AUS$ (Gold)
Gday mate…….It cant stand the USD$ and the Yen, and should party a lot with its neighbours (NZ$) but seemingly not enough as you would trade reliably on … loves to party hard with high interest rates on offer compared to the other Majors.
Non Forex-wise …….“loves” Gold (positive correlations) but enough to trade reliably on (?)

NZ$(Lightblue)
Same relationships as its neighbour above…..is also fond of high interest rates…….

YEN (Yellow)
Volatile and mainly “hates” all currencies (ie negative correlations) except the
USD$, which generally moves in the same direction (but US$ is generally less volatile). People sell it in perceived times of greater risk/opportunity as it has the lowest interest rates out there....then they can buy high Yielders (AUS$ and NZ$)
Non Forex-wise It “hates” (negative correlation) most Stock indices and Commodities. Traders sell Yen (the carry trade) to buy these (and Vice versa)….watch it against the US Stock Indices for closest (negative) correlations


CAD$ (Brown)
Difficult to pin this one down - except moves generally negative to US$ and Yen
Non Forex-wise …….“loves” Crudeoil (positive correlation) but enough to trade reliably on (?)

USD$ (Green)
The “Daddy” whether the rest of the unruly forex family like it or not !.

“Hates” all currencies (ie negative correlations) except the Yen , which generally moves in the same direction (but the US$ is generally less volatile). People sell it in perceived times of greater risk/opportunity (its the major holding reserve currency for most countries) Counter-wise traders will buy it as a safe haven when they are dumping everything else and risk appetites are falling……commonly dumping the high Yielders (AUS$ and NZ$)
Non Forex-wise It “hates” (negative correlation) most Stock indices and Commodities. Watch it against Gold especially for some great (negative)
correlation Plays .

stand by everything I say until someone proves me wrong.....

N

 

[NVP]

10.13 class is open.....

right....I think that if red breaches that line on 5min its worth a punt

buy GBP sell USD

N

 

[NVP]

crap call ?

this call is not supported by the indices corrie that has decided on the 14/3 setting that everything is falling !!!

(I would like some indexes/commodities to get above the zero please !!!!

N

 

[NVP]

c'mon go go !

this is the 1 min....i'm hoping the breach is coming...its certainly trying !

N

 

[NVP]

it should be rising !

damn......look at the right corrierisk indicator all lining up to support a USD fall and help the GBP rise !

although gold is languishing below zero and I wuold prefer to see that above zero to help drive down the USD......

N

 

[NVP]

not bad...........

well she finally went although I believe it needed the gold line startign to rise on the 5 min corrie risk indicator to push it into action.........

around 15 pips have been delivered......not bad as I 'm really just dipping in and out this morning to get the training going

of course GBP could have never broken that resistance line and reversed aggressively downwards......but it hasnt (yet)

also its a shame that the Yen/GBP spread is so big as selling the yen through this whole period was profitable !

N

 

[NVP]

Euro pressure.....?

hmmmmmmm.....may be worth a cheeky sell Eur buy USD...

N

 

[NVP]

Aussie play now.....

see chart......i'm backing the AUD to follow gold up up up

N

(what is this guy talking about ? :whistling)

 

[NVP]

corrie risk indice now warming up for the day !

this is on a 14/3 .....looks perfect but hindsights a wonderful thing..........

N

 

[NVP]

1 more comment on the Tag team.......

i'm not trying to be smart here with this deluge of posts...just showing you what is really going on regarding currency behaviour that is difficult to spot on simple pair charts

trading and predicting it is another matter

N

 

[NVP]

c'mon the new team !

Hey everyone ..........

i know it will take a while to get the stuff loaded and to play but please start to post and ask questions when you can..........

believe me it cant get any worse than my spurilous utterings today so far....

N

 

[NVP]

Tag Team divergence.......

when true tag team divergence occurs its a wonderful thing

this is more visable on the high Ma settings (1000/1) and Yen goes one way and USD the other

I am not referring to the divergence of the yen moving much faster than the USD but in same direction thats volatility...this is different direction

this has just happened below......usually a nice play to trade the yen followers against the USD for quick bucks...but make the most of it as it rarely lasts long...

SPOT THE DELIBERATE ERROR - I MEANT BUY GBP AND SELL USD ON THE CHART (jees)


N

 

[GKSaue]

Wow, I'm gone two days and return to several unread pages, someone's been busy

I really enjoy reading this thread. First found it (as probably many others) when JF's correlationcode ads were buzzing around.

I've been trading forex for a few years, but mostly as a hobby trying to understand the international markets better. I am looking at a possibility of it replacing my current job somewhere down the line though..

So far my main account has been Oanda and have not used MT4 much before (just barely with a demo account way back..), so in my first question when it comes to applying these indicators..:
Which broker have you decided to use with MT4, and do you use that broker for your trades or just a demo to get the feed for MT4?
Since you've been discussing taking in several other factors than just the main currency pairs as well, maybe you have a good suggestion for a thrustworthy broker that's got a low spread, good pair selection (maybe commodities..?), possibility of having the account in Euro or other non-USD currency and open for european (norwegian) customers etc?


Thanks for all your great work!

And really liked yesterday's movie, very professional and easy to follow


Cheers,

Glenn
Norwegian fxNovice

 

[NVP]

thanks mate !

Hey Glenn !

I personally trade worldpreads but to be honest havnt traded much at all for a long while........I decided that I couldnt research and develop this and trade Plus I have a full time job.........i'll get back in saddle at some point but to be honest I havnt got the true edge yet and thats what this thread is all about - finding a correlation edge

whether the work here gets you into trading using straight correlation tools or its just another part of the armoury its fine with me...........join the party

I think that theres plenty of recomendations re brokers on other T2W threads so have a look

I have a basic ODL version of metatrader but I know others have different metatrader broker links and actually more markets on them such as Treasuries which i really need to include

as for yesterdays movie.....yep looks like those guys have a decent strength indicator (cant comment if its part of other $ package/costs though - probably)....

(sideswipe correlation code time) look out there and the indicators can be found pretty much free (well some are) but they may need a little tweaking to get to your own taste and practice practice practice helps spot the moves....

my corries are just my own version of the correlation cosmos......

N

 

[NVP]

when true tag team divergence occurs its a wonderful thing

this is more visable on the high Ma settings (1000/1) and Yen goes one way and USD the other

I am not referring to the divergence of the yen moving much faster than the USD but in same direction thats volatility...this is different direction

this has just happened below......usually a nice play to trade the yen followers against the USD for quick bucks...but make the most of it as it rarely lasts long...

SPOT THE DELIBERATE ERROR - I MEANT BUY GBP AND SELL USD ON THE CHART (jees)


N

hi all......looks like there was about 10 pips in this one but these are 1 and 5m charts so scalping is what its all about.....fast in fast out as I said when true divergence is seen !

N