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Originally Posted by Muddyguy
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Bill, I am not as familiar with this thread or your work as I would like - I presumed the EA was a commerical venture of yours (hence the trial). I wasn't aware of the Yahoo group either - but now I am, thanks!
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It isn't the same, though many people continue to repeat this statement because they read it in a post somewhere by individuals who stated an uninformed opinion as fact.
At an extremely basic level look at the elasticity. In the GBPCHF there is none. Zero. It is either up or down. Trading the GBPJPY and CHFJPY there is substantial elasticity as they both may be any combination of up and down. And, one can potentially trade for positive swap AND make a swing action profit even if both pair fall in value. Can't do that in the GBPCHF cross. I have discussed this in more detail in previous posts in this thread.
Further, if they are the same, one would expect that the drawdown in the two pairs to exactly match the drawdown in the GBPCHF from July 1st to now (it was 1,046 pips to be exact). Since they don't match, they are not the same.
Correlation trading has a relationship between the two traded pairs and its cross, but it is NOT the same as trading the cross directly. There is more than just a psychological benefit to trading the pairs - the benefit can also be mathematical.
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Life is about learning and I am never afraid to admit I do not know something - the minute I realise the error of my ways, I can mark another item off of my 'to learn' list. And I certainly have a lot to learn about hedging/correllation
I really appreciate you taking the time to answer my questions.
