Basket-Stablize Help Me Please - page 2
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@diostar: AFAIK, when people talk about baskets, they usually tend to get into Pair Correlation. I believe the chart you posted above is a Pair Correlation chart showing if one pair a Negatively or Positively Correlated to another. The Basket I'm trying to implement is something much simpler.
I have this EA which have showed good results back-test/live for me in the past. The EA works on all currencies (at least the 6 majors).
If USD is strong at the moment against all pairs as an example, the EA could end up with the following sets of orders. Sell-EURUSD, Sell-GBPUSD, Sell-AUDUSD, Buy-USDJPY, Buy-USDCHF, Buy-USDCAD. With me holding on to the following Sets of orders, should the status of the USD change by news or whatever, all these positions will start going against me. Sure the system has methods of getting out of these positions with a profit/ break-even but this setup causes bigger drawdowns on the account.
what really is your definition of basket: To me a Basket is a collection of currency pairs.
and what you want out of this "basket"? Not holding too much risk exposure to 1 currency (not necessarily pair).
Are you referring to the Currency (& not pairs) index? Yeah, I guess in this case, it's acting more like a Dollar Index.
pos+, neg-, between any two currencies (NOT pairs): I do care about Correlations, but the system is not base on Correlation trading.
Have you thought of creating your "basket" into an indicator form? Yes, but at this point, its one step above my skills.
instead of having every logic hard-coded wherever in the EA: I want to limit myself to the few currencies I've listed above for now.
In the future, I hope to create a real correlation pair based system, and perhaps then I'd create an Indicator like yours.
The indicator which I've created for this is in the picture below my price chart. Also, I comment which currency is Strongest and Weakest.
ubzen:
If USD is strong at the moment against all pairs as an example, the EA could end up with the following sets of orders.
Sell-EURUSD, Sell-GBPUSD, Sell-AUDUSD, Buy-USDJPY, Buy-USDCHF, Buy-USDCAD. <---- have you considered the EA trade on 1, and not jumping on all the majors?
With me holding on to the following Sets of orders, should the status of the USD change by news or whatever, all these positions will start going against me. Sure the system has methods of getting out of these positions with a profit/ break-even but this setup causes bigger drawdowns on the account.
If you don't get into their correlations, but yet still wishes to trade on all n pairs (what more the majors), then there is n times the risk of deficits and just (n/2-1) times the chance of surplus.
have you considered the EA trade on 1, and not jumping on all the majors? Yeah, thats how everything starts, Example: in the back-tester. I'll like to have the higher frequency of trades that trading on 6-pairs brings. + in the real world, all pairs are not perfectly correlated all the time. Most correlation systems breaks when the pairs lose their correlations at least that's what I've read.
Put another way, I trust my System Signals because they've been time tested. I don't trust Correlations, for several reasons, 1 being I don't have much experience with em. My Basket Stabilize is more of a Money Management Tech than a Direction Tech Imo.