Hedge and Correlation Strategy

Moving Home Trading Method!

You can skip the first 99 pages of this thread, as we have changed over time, refining our entries and exits, and creating a far better method. Start reading on page 100 (or even pages 95-96 if you want some background) which is here.

You'll find 5 Easy Actions to this brand new ”Moving Home Trading Strategy, previously known as the ”Hedging and Correlation” Method. We're still hedging and correlating, just that the new name will help us envision what we're wanting to achieve in this trading platform, and we have altered our entries and exits after a lengthy time of practicing.

Most pairs which are positively correlated above 75% live” under the 20-25% ”gap” line on our one indior we use (see below--thanks to SMJones for developing it!) . This is their house. Occasionally they will travel a little ways away from home (for example up to 50 percent) and sometimes they will make a long trip (over 80 percent). But of course ”there's no place like home” so they eventually return to under 20%, where they live the majority of the time. We will open trades when the pairs are off on a trip, helping them to get back home, and we'll profit on the way back.

There are just 5 steps to trading this successfully:

1. Go to http://www.mataf.net/en/tools/01-01-correlation and click ”Forex Correlation” under ”Tools and Charts”. Put a test on all pairs.

2. Scroll down to ”Daily” and note each pair with a positive correlation of 75 percent or higher (I'm currently tracking 25 pairs, which is very simple to do with the indior mentioned below).

3. Open 5M charts on your own MT4 system for all of the pairs chosen in the measures above. Place the ”Stochastic Different Pairs 1.4b” indior on each of the charts.

4. When a 5M pub (candle, whatever) closes above 80% differential sell the pair that's high, buy the pair that's low.

5. Close at 50 percent, or lower, depending upon your risk tolerance.

This particular method is a short term egy which has you in and out quickly.

Rewards:

1. No tracking charts needed. You can set the ”Stochastic Different Pairs 1b” to alert you via pop-up on the pc, or email to your cell phone.

2. ”Built-in” stop-loss. This implies that since we exit at 50 percent we're out with either a gain or a loss, so we do not need to place stop losses with our trades. We will only close out when the gap reaches 50%.

3. ”Built-in” trend/sideways moving marketplace security. When nothing much is happening the ”gap” percentage drops under 20 and we don't do nothing.

4. A lot of opportunities to trade throughout the day. You can trade this method anytime of the day or night. No longer ”first hour of this session just”, though there certainly is more action during ”session” times.

This method would no doubt work for longer time frames as well, and in this thread you may don't hesitate to test different timeframes, different entry/exit standards, different anything. It would be useful if you were to examine your findings (even trading negatively correlated pairs, even if you've got a solid constitution). Additionally, there are EAs developed for this particular method.

Enjoy!


P.S. I cannot seem to join the 1 indior we use, but if you begin studying on page 100 you may come to it. It's called Stochastic Different Pairs 1.4b.

P.P.S.S.. Many thanks to Roundrock for developing an EA!