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.
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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:
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?