Thread: How do you use correlations?

If you're long gbp/jpy and brief chf/jpy you're long gbp/chf. The only way this egy would work is if you had lots of capital. It has been discussed before though. If the gbp/chf drops 100 pips you input, then you input again, again and again and again again and again each time there's a 100 pip fall. You can carry that commerce and earn good attention while you wait for your averaged place to move upwards.

Although you'd require at least a 100 or perhaps 200k account to feel comfy with normal lot entrances at one time. Considering that safe averaging is obviously 1,2,3,4,5 and not 1,1,1,1,1. This is to make certain you dont ever need to get even close to your initial entrance.

interesting. I have never given a thought to correlations before. Thanks guys for all the info

Originally Posted by ;

If you are long gbp/jpy and short chf/jpy you are long gbp/chf. The only way that this egy would work is if you had lots of funds. This was discussed before though. In case the gbp/chf drops 100 pips you enter, then you enter again, again and again and again again and again each time there's a 100 pip fall. You can carry that commerce and earn decent attention as you wait for your averaged position to move upwards.

Although you would require at least a 100 or even 200k account to truly feel comfy with standard lot entrances at one time. Considering that safe averaging is always 1,2,3,4,5 rather than 1,1,1,1,1. This is to ensure you dont need to get even near your first entrance.

I think you missed my point. This example was over simplified. It started out with 6 complete lots. And on that position I'd buy and sell miniature lots on 100 pip swings.

I did a test with GBP/USD and JPY/USD from Mar 2005 through Dec 2005. There was a 2000 pip fall from the GBP/USD starting the start of March. My account was alloed in such a way to create about 40 percent. Be aware that this is a test however, the account survived that fall. I had to add over 20 more miniature lots but when GBP stop going down I began cashing in those small lots and also the account ended around 80%.

You don't need a 100K account to do this. It works on almost any size account. The crucial thing is to trade small enough lots.

Where can get the interest rates etc

This site has a lot of excellent tools incuding rates: http://www.mataf.net/en/analysis-interest_rates.htm

Originally Posted by ;

I believe you missed my point. This example was over simplified. It started out with 6 complete lots. And on that position I'd buy and sell mini lots on 100 pip swings.

I did a test with GBP/USD and JPY/USD out of Mar 2005 through Dec 2005. There was a 2000 pip fall in the GBP/USD beginning the start of March. My account had been alloed in such a way to make about 40%. Note that this was a test however, the account lived that fall. I had to include over 20 more mini lots but when GBP ceased going down I started cashing in those small lots and the account ended around 80%.

That you don't need a 100K account to do this. It works on almost any size account. The crucial thing is to trade little enough lots.

I dont really understand. 80% return is outstanding! Would you mind posting a bit more details? Would have the yields come whether or not the market retraced in your favor?

I have to be missing something (as normal ). . Probably evident also.

OK.
Here's one of the ways I use Correlation.

Example simply:

I'm Long Pair'A' and have been for 3 times.
Tommorrow, NFP is going to be published.
I really don't wish to leave my trade only because of a news release occasion so...

Hedge It.

However, with what? Hmmmm. Let me check out my current Correlations Spread sheet and then I will pick.

Correlation is... gt;80 then take another hand. or Correlation is... lt;20? Then take the same side.

Originally Posted by ;

OK.
Here's one of the ways I use Correlation.

Example simply:

I am Long Pair'A' and have been for 3 days.
Tommorrow, NFP will be released.
I really don't wish to leave my trade simply because of a news release event so...

Hedge It.

But with what? Hmmmm. Allow me to check my most current Correlations Spread sheet and then I shall decide.

Correlation is... gt;80 then choose another side. or Correlation is... lt;20? Take the side.

I really don't understand how an imperfect monster is far better than exiting the market and restoring your original position after the smoke clears.

Originally Posted by ;

I don't know how an imperfect hedge is far better than exiting the market and restoring your initial position after the smoke clears.

That.
Doesn't surprise me whatsoever.

It would appear that you still have some revelations ahead.

Originally Posted by ;

That.
Does not surprise me at all.

It would seem you still have some revelations ahead.

Why not explain it to us like we're seven? Is this a competition on who is the cleverest or an open forum to assist individuals that still have some revelations ahead?