Hi all,
I am aware that many people attempted to do such a thing on this forum but I can't seem to find anyone in threads who actually did extensive testing of this.
Consider two anti-correlated pairs such as EURUSD and USDCHF. Using their respective momentum indicators (RSI, STOCHASTIC, etc.), we can build a synthetic indicator like the difference of both (e.g., RSI(EURUSD) - RSI(STOCHASTIC)) to find times where EURUSD is showing overbuying signs, while USDCHF confirms it with overselling signs. The anti-correlation would make it so that if the reversal has more chance to happen on both, and if it does not happen, there could be possibilities where one pair actually reverts while the other does not.
I made some small testing using M1 data in Python using this system:
- Buy EURUSD and sell USDCHF whenever STOCH(USDCHF) - STOCH(EURUSD) > 60 and the other way around
- Close the order when the differential reaches 0 again
...but it seems like it's not really working out at that timeframe. Did anyone else actually already try this in demo/live conditions, and can share some knowledge on this? (e.g., which pairs, which timeframe, which trading sessions, which indicator, which exit condition?)
This thread would be more like an open discussion, and I would be very happy if you guys could share your experience on such ideas, and how to improve.
Thanks!
I am aware that many people attempted to do such a thing on this forum but I can't seem to find anyone in threads who actually did extensive testing of this.
Consider two anti-correlated pairs such as EURUSD and USDCHF. Using their respective momentum indicators (RSI, STOCHASTIC, etc.), we can build a synthetic indicator like the difference of both (e.g., RSI(EURUSD) - RSI(STOCHASTIC)) to find times where EURUSD is showing overbuying signs, while USDCHF confirms it with overselling signs. The anti-correlation would make it so that if the reversal has more chance to happen on both, and if it does not happen, there could be possibilities where one pair actually reverts while the other does not.
I made some small testing using M1 data in Python using this system:
- Buy EURUSD and sell USDCHF whenever STOCH(USDCHF) - STOCH(EURUSD) > 60 and the other way around
- Close the order when the differential reaches 0 again
...but it seems like it's not really working out at that timeframe. Did anyone else actually already try this in demo/live conditions, and can share some knowledge on this? (e.g., which pairs, which timeframe, which trading sessions, which indicator, which exit condition?)
This thread would be more like an open discussion, and I would be very happy if you guys could share your experience on such ideas, and how to improve.
Thanks!