Hedge and Correlation Strategy - page 4
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Who are you responding to? You quote nobody, and your statements make no sense unless connected to a context.
Can you please say who you were responding to, or at least try to make some sense in your post?
Thank you.
NO IDEA
I think he used it once or twice and make money in that market scenario
is it mathematical proven -- for correlation, dunno
=========
in term of Personal statistics
fx is about balancing of Certainty , overall profit, overall loss and # of transaction used -
what we can adjust would be (assume our habit and mindset won't change)
DIRECTION during entry
high / low frequency transaction
emotion towards profit and loss -- this is human nature and the main reason why we loss - small discounted profit (like supermarket price) while forex move like the YACHT / private Jet price == not a product price variation in walmartUpdate
Hey Dreamliner,
Thanks for starting this thread. These are some very interesting ideas. How is your system doing now?
Are you still working with it? If so, how have you changed it ?
If not, why did you abandon it?
This system seems to have promise, perhaps needing some more tweeks.
Yes I still trade it with some modifications. I have switched to Forex Factory as it is much more alive. You can see the thread here.
You still use this strategy
You still use this strategy? If yes have you modify or improve it. You still use dailyfx.com for chart? Thanks for your reply
Greetings,
Several on here are posting hedging strategies, so I thought I would post one I have been trading for about a week. It has all been positive because I do not use stop losses. I am posting this here because people are usually able to pick holes in the strategy and show where it would fail, and I want to know this before I keep trading it. Here it is:
1. Go do dailyfx.com and click on "charts" and "live charts" and open up a EUR/USD.
2. Click on "instruments" and overlay a GBP/USD chart.
3. Choose any timeframe (I use 30 minutes).
4. Notice how the currencies flip flop, up and down on each other. At one time GBP/USD will be on top, then a couple hours later or a day later EUR/USD will be on top.
5. Buy the currency that is on the bottom and simultaneously sell the currency that is on the top.
6. When they converge and cross exit for the win.
So we are entering the position when there is a gap between these currency pairs, and we are exiting when the currency pairs cross (the one that was on the bottom is now on top, the one that was on the top is now on the bottom).
Obviously the bigger the gap between the two currencies upon entry the better.
I trade with 1000 units per $100.00 account balance or 10,000 units (mini lot) per $1,000.00 account balance.
This system has produced a return of approximately 15% on my account balance in the previous week.
This can also be done with GBP/JPY and EUR/JPY.
Please comment on this strategy as able.
Basic questions on how to open charts, overlay charts, etc. will not be answered as I do not have time to discuss anything but the strategy itself.Correlation Hedge indicator
Hi Everyone,
There are quite a few strategies out there with correlation and hedging. Some implement overlaying chart, some try with overlaying stochastics, but I want your help to make things even simpler.
I'd like an indicator that simply calculates the difference in price of two pairs. E.g: EU and GU correlate. I simply calculate and average of the difference between the two pairs and if the difference goes way below or above the average, I buy and sell accourdingly.
This indicator seems pretty basic. It should just show a line (value) of the difference between two closing prices over time, but I can't find such and indicator anywhere.
Can someone please link one here or quickly put one together? Your help is much appreciated.
Peter
Hi Everyone,
There are quite a few strategies out there with correlation and hedging. Some implement overlaying chart, some try with overlaying stochastics, but I want your help to make things even simpler.
I'd like an indicator that simply calculates the difference in price of two pairs. E.g: EU and GU correlate. I simply calculate and average of the difference between the two pairs and if the difference goes way below or above the average, I buy and sell accourdingly.
This indicator seems pretty basic. It should just show a line (value) of the difference between two closing prices over time, but I can't find such and indicator anywhere.
Can someone please link one here or quickly put one together? Your help is much appreciated.
PeterIt does not make sense : try difference between USDJPY and EURUSD for example
It does not make sense : try difference between USDJPY and EURUSD for example
He probably is looking at the slope of the price change
He probably is looking at the slope of the price change
imho you would do better to have a norm to measure standard deviations against... so the first step is to normalize or square price itself...can you take the indexes and develop a norm or even if necessary a norm for shorts with one for longs... like a straight line regression expectation or something to measure deviation against. i dunno you math guys can figure that out .... the point is to have strong correlation deviated...then regress back to correlation i would think... in order to do that you need the norm...i.e. the normalization of the indexes just my 2 cents
PS when peter says to have an average he is presuming he has strong correlation and that a a deviation from that average will revert..at least that is how i read what he is saying
please correct me if i am wrong
hedging in just one pair is profitable too.
and i have found a profitable way .
but i am not sue hedging on correlation can be really profitable or not.
because correlation between currencies can change over time because it is highly
related to fundamental factors.
for example before brexit vote correlation between GBPUSD and EURUSD
was highly positive but after brexit vots they do not seem to have correlated to each other.
hedging in just one pair is profitable too.
and i have found a profitable way .
but i am not sue hedging on correlation can be really profitable or not.
because correlation between currencies can change over time because it is highly
related to fundamental factors.
for example before brexit vote correlation between GBPUSD and EURUSD
was highly positive but after brexit vots they do not seem to have correlated to each other.
Indeed Seyed, it's alike & correlated but very independant in the same time.
Maybe should correlation be heard as a global notion?