Correlating instruments as indicators, pros and cons?


Hi, interested in hearing your opinions on this...

I day trade NASDAQ, and since I work on small timeframes, I need to be able to make decisions quickly.

I sometimes look at correlating instruments as indicators to inform my trade decisions, examples of what I will look at:


-Pivot Points



-Moving Averages

-Market structure

I will look at this on:




...or others I could consider:





But the best trades are usually easy to see using NASDAQ by itself, and I often find that looking at other instruments will give me conflicting signals, analysis paralysis, or simply distract me and make me miss something important.

So although I know a lot of pro traders look at correlating markets as indicators, I'm currently experimenting with completely cutting them out of my approach.

I've tracked this a lot in the last few weeks and I'm starting to find that there aren't enough benefits to keep looking at them, for reasons stated above, and also:

- Sometimes the other instruments provide signals after the fact so they don't work as the leading indicators I would want them to be

- When their signals aren't lagging, I often find that the signals on NASDAQ were sufficient to take a trade and that looking at other charts just makes me perform more analysis to come to the same conclusion

What do you think?

Lorentzos Roussos  

Well the approach with the "correlation" is guessing a dish by the odor

This is how retail , us , trades . We are looking for indications of what big players (in your markets) will want to do , or in fx what the mass (of capital not traders) will want to do.

That's it . So if you were a neural network i'd suggest going through all the samples constantly until you can "smell" the sentiment. As a NN you would be detecting the "reasons" for the capital flows and not the "activity" of said capital flows prior to a decision (to allocate capital).

In manual i guess this means more practice.