Hi, I would like to know if there are trades according to rules just prior and after the vertical line. Yellow line is reversed USDCHF. So prior to the line would be a sell USDCHF and after a buy EURUSD? Thanks. image

Pair Divergence Method

I never thought this would happen. I just closed EURJPY/GBPUSD with +3 pips. Last Friday, I had -225 pips on it after the big drawdown.

Hedge and Correlation Strategy

Somebody made a similar remark earlier, but I am relying on EURGBP overbought/oversold for entry signals. GBPJPY is going up also. To me, what is important is that the gap between the two pairs will decrease. But we'll see. As you say, I am testing ...

Hedge and Correlation Strategy

... in 15 min chart.

Hedge and Correlation Strategy

I am entering EURJPY (sell) and GBPJPY (buy). CCI (21) is overbought in 4hr and 1hr charts and just crossing +100 downwards.

Hedge and Correlation Strategy

Same for me. I just closed one of my trades for +5pips gain. I am now -48pips overall for the two combos left. I will let them run just to see what happens. I looked at the thread billbss was refering to and one entry technique is to watch for ...

Hedge and Correlation Strategy

Thanks Billbss. I know there are a few threads on the subject and in other forums and I am starting to think that the key to success for this strategy is the time of entry. Not only threads, but many studies as well (see pdf). There must be a state ...

Hedge and Correlation Strategy

Last week, I took three trades AUDUSD/NZDUSD, EURJPY/GBPUSD and EURUSD/USDCHF because I thought I was entering with a spread large enough. By the end of Friday, I was something like -325 pips. Since I am only demoing, I let the pairs run. This ...

Hedge and Correlation Strategy

If I understood correctly Spieler's method we watch for a divergence of at least ±0.25% between actual price and previous day's close of EURCHF. If the divergence is negative, we buy 1 lot of EURUSD and 1.5 lot of USDCHF. If the divergence is ...

Hedge and Correlation Strategy

Thanks. I will have a look at that.

Hedge and Correlation Strategy

If this works out, I would be tempted to use 3 stdev.

Hedge and Correlation Strategy

[quote=magicchance;3049575][quote=chamane;3049528]...knowing price will snap back to profit with a good probability. I don't know this. I am testing the strategy trying to find if it is worth trading it. There are many unanswered questions. I ...

Hedge and Correlation Strategy

That's why I check the short term, the mid term and the long term correlations. Knowing all correlation values are high, I suppose that there will some kind of cointegration (snap back), but I am not sure about that. Cointegration is starting to be ...

Hedge and Correlation Strategy

That's seems to be another interesting approach. I hope I am not interfering with the spirit of this thread. I am trying to find ways to trade this strategy with hints avoiding drawdowns (if this is possible) knowing price will snap back to profit ...

Hedge and Correlation Strategy

There are a few articles on the WEB concerning pair trading with stock. Here is one of them. They talk about dividing one pair by the other and enter a trade when the ratio goes beyond its average by 2 times the standard deviation. I think it's ...

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Here are a results of a few calculations I just made. I am trying to figure out how to select the best pair combination for this strategy. I picked pairs that I thought would be interesting. The upper part of the table show a fairly good correlation ...

Hedge and Correlation Strategy

I decided to close CADJPY/AUDJPY for a +26 pips gain. So I am +138 pips for the week, but AUDNZD (-52 pips) and GBPUSD/EURJPY (-85 pips) are still running.

Hedge and Correlation Strategy

Same situation for me with GBPUSD/EURJPY. I'm down -160 pips right now, but I am staying in the trade just to see. I have made a few stats on the correlation of that combo. What it tells me is that maybe I should have waited before entering because ...

Hedge and Correlation Strategy

Looking at the correlation table, the relation between the pairs is shifting somehow. I would still stay in the trade as I believe prices will gather again. image

Hedge and Correlation Strategy

I think that AUDUSD/EURUSD AUDUSD/NZDUSD EURUSD/NZDUSD GBPUSD/EURJPY are among the safest pair combinations to trade right now. They all have high correlation values on hourly timeframes and longer timeframes as well (daily, weekly, monthly).

Hedge and Correlation Strategy