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pierre23
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Postby pierre23 » Sun Jan 11, 2009 11:34 pm

Thought: Use currency correlation to hedge trades on two pairs which have a correlation coefficient of say -0.90 to -1 only.

http://fxtradeinfocenter.oanda.com/char ... ions.shtml

From the link above, you can see theres a very strong negative correlation between the EUR/USD and USD/CHF from the last 1 week to 2 years.

You go long on one and short on the other. Now if the correlation coefficient is correct then when one pair goes up, the other should be going down, almost in sync (if it has a very strong correlation, -0.9 to -0.1).

And from there it's just a matter of managing the trade. When theres strong moves to the upside on one pair, you may want to close your short position on the other. Or close half the short position just in case it turns on you, so you won't lose AS much. (You won't profit as much either if it keeps going in your direction)

Yes, profits are not as high, BUT if you can pull off 10, 20 or 30 pips with a very high win rate whose to complain?

Of course, you would only be choosing pairs with a high - very high correlation. My initial thought would be doing this to produce very high win rates.

Obviously this is not an original idea.... but any thoughts?

edit: I was just looking at the currency correlation chart and thought it might be cool if there was an indicator in which you could input how many bars (custom timeframe) and it would compare the price movements to all the other currency pairs and show you the correlation coefficient to those pairs. The equation to work out the correlation coefficient is in the link above, if you know your math ._.

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pierre23
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Postby pierre23 » Mon Jan 12, 2009 12:03 am

Sorry, last post I got a little mixed up, I mean instead of going short on one currency and long on the other, you go LONG or SHORT on BOTH currencies.

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MightyOne
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Postby MightyOne » Mon Jan 12, 2009 1:40 am

pierre23 wrote:Sorry, last post I got a little mixed up, I mean instead of going short on one currency and long on the other, you go LONG or SHORT on BOTH currencies.


If you are going to do some thing like that you might want some thing like this:

http://www.mqlservice.net/catalog/produ ... ucts_id=41

I wouldn't even consider it :shock:

Here is another script from MQL that would make your trading days less stressful if you trade via meta charts:

http://www.mqlservice.com/Films/ChSLTPWM/ChSLTPWM.html

Think it costs ~$20.19 US

pierre23
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Postby pierre23 » Mon Jan 12, 2009 2:07 am

I'm not quite sure I understand the first link you posted.. it doesn't seem like it has anything to do with the correlation coefficient of two pairs. What I was trying to get at, is find two pairs which have a strong negative correlation and place a long or short on both of them. Because of the strong correlation when one moves up, the other would be moving down. Then manage the trade as I mentioned above.

The second link you posted looks pretty cool, just having to drag the sell/buy lines to change your tp and sl. I don't use mt4 to place trades though.. thanks anyway!

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iPeriod setting in TRO_DYNAMIC_FIBS_SR

Postby forextor » Mon Jan 12, 2009 2:50 am

Dragon33,

Since you are having so much success with it, may I know what number do you set for iPeriod in your TRO_DYNAMIC_FIBS_SR?

I think the default number for iPeriod is 5, but TRO seems to be using 21 for TRO_SR_RR. So what do you use? 5? 21? or some other number?

Also, do you use M5 or M15? I seems to recall that on babypip you said you watch M15 (and not M5). Just want to confirm that.

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TheRumpledOne
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Postby TheRumpledOne » Mon Jan 12, 2009 4:27 am

forextor: the number doesn't really matter.

For the dynamic indicators I use 5 periods.

In TRO SR RR, I used 21 just because it's a fib number. But I could have used 20 or 22.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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MightyOne
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Postby MightyOne » Mon Jan 12, 2009 6:00 am

Yet another H1 ZL bounce...
Look at how far the 5m candle had to move to reach it.

The further the candle has to move to reach your price in 1 bar the less risky the trade.

Image

Simply amazing how many times when you get a good price and things don't go your way you can still come out smelling like roses :wink:

Image

*BOING*

Image

Just a ZL to ZL trade...

Image

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TheRumpledOne
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Postby TheRumpledOne » Mon Jan 12, 2009 1:30 pm

MightyOne, if you would kindly state and/or label your entry and exit prices/times in your posts/charts, it would make it much easier for people (ME) to SEE.

Thanks for posting.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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TheRumpledOne
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Postby TheRumpledOne » Mon Jan 12, 2009 3:46 pm

Image

Instruments only trading.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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cfabian
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Postby cfabian » Mon Jan 12, 2009 10:41 pm

Yes please... Just draw a line from the entry to the exit to make it more clear.

Your observations READ favoulous, but we'd like to SEE (learn) how the expert trades this.

Cheers


TheRumpledOne wrote:Image

Instruments only trading.

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