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I was thinking of adding 2 more pair...Can you tell me which ones might be good to add to my exiting pair?:
AUD/USD & NZD/USD
EUR/USD & GBP/USD
ES
I AM ALL FUNDED AND LOGGED INTO MY MANAGMENT ACCOUNT TO VERIFY. BILL YOUNG SENT ME AN EMAIL ALSO VERIFYING MY 5K MANAGMENT ACCT. SO NOW IT IS JUST TO WAIT UNTIL FRIDAY, AS THE DISCLOSURE DOC'S EXPLAIN THAT IS WHEN THEY ACCEPT NEW CLIENT'S. I MUST SAY THIS ALL WENT EXTREMLEY EASY AND THERE WAS A LOT OF PAPERWORK THAT I FILLED OUT WITHOUT MISTAKE...THIS IS A FIRST FOR ME TO BE MISTAKE-FREE AND A GOOD OMEN. I HAVE HAD A FEW MANAGED ACCOUNTS BEFORE AND IT IS NOT UNCOMMON FOR TRADERS TO TRADE EACH OTHERS MONEY FOR DIVERSIFCATION. LOOK...I TRADE TO MAKE MONEY AND I DO NOT CARE WHO DOES IT...ME OR THEM, IT JUST DOESN'T MATTER, AT MY STAGE OF 48 YEARS ON THIS EARTH. I WONDER IF I MUST SEND MR. YOUNG BEER TOO?
DO NOT TRADE WITH MONEY THAT YOU CANNOT LOSE, NO MATTER WHO TRADES IT
Last edited by ElectricSavant; 08-01-2007 at 10:58 PM.
Any suggestions and why? (I know that highly correlated pair could be preferred and about Andre's site MATAF)
ES
P.S. I made bold a provacitive statement in the quote below? (the picture of the schoolyard teeder/todder comes to mind)...Could this be a two edged sword, like one heavy guy on one end making the drawdown greater?
It has to work that way, otherwise it goes out of balance in terms of lots added. This approach works what is usually the weak side more and seems to do that well. I've run this since April against JPY pairs and it has been ok.
However, the best system is to add the trades manually at the trader's discretion. That keeps you paying attention to the market and less likely to let it go bad.
Without arguing or sounding like a smart arse...my humble retort is IF I COULD TRADE DIRECTIONALLY AND MAKE GOOD MARKET CALLS...I WOULD NOT NEED THE TAMING OF THE VOLATILITY THAT YOUR SYSTEM PRESENTS.
Your system is EXACTLY the way I want to trade and do trade. So now you are stuck with me...get rid of me now or you might be sorry.
Now occasionally I might be able to put on some high probability ratio changes with some tricks that you might teach...one of them being a tip you disclosed by accident or on purpose...you know the one that when there is a fast velocity drop or rise a change in correlation is probable. But again my ratio changes will be far and few between and very slight in nature...as I will prolly' be wrong and do not want to blow up the account. Folks trade small and get the room you need.
ES
However, the best system is to add the trades manually at the trader's discretion. That keeps you paying attention to the market and less likely to let it go bad.
Last edited by ElectricSavant; 08-02-2007 at 05:32 AM.
I was thinking of adding 2 more pair...Can you tell me which ones might be good to add to my exiting pair?:
AUD/USD & NZD/USD
EUR/USD & GBP/USD
ES
Hi,
Now I want you go to exploring rather than just have me hand pick them for you. I did a lot of long/long while the carry trade was strong, and switched to long/short in early June expecting the correction. Check out some strong longer term positive/negative correlations and think about if/how they would be impacted by a carry trade unwind/wind. Throw them on and watch them work a bit. You will learn more that way! I promise.
Without arguing or sounding like a smart arse...my humble retort is IF I COULD TRADE DIRECTIONALLY AND MAKE GOOD MARKET CALLS...I WOULD NOT NEED THE TAMING OF THE VOLATILITY THAT YOUR SYSTEM PRESENTS.
Your system is EXACTLY the way I want to trade and do trade. So now you are stuck with me...get rid of me now or you might be sorry.
Now occasionally I might be able to put on some high probability ratio changes with some tricks that you might teach...one of them being a tip you disclosed by accident or on purpose...you know the one that when there is a fast velocity drop or rise a change in correlation is probable. But again my ratio changes will be far and few between and very slight in nature...as I will prolly' be wrong and do not want to blow up the account. Folks trade small and get the room you need.
ES
However, the best system is to add the trades manually at the trader's discretion. That keeps you paying attention to the market and less likely to let it go bad.
Hi - I didn't make myself clear. I'm not talking about scalp level directional trading. I hate that, too. I'm talking about broad strokes in the weekly market. What is the weekly market trend in the currencies? Anything major coming in the next couple months? Example - Japan will be looking at interest rates this month. An increase will drive the JPY up a bit. Will it happen?
The good news is that if you get it wrong, the correlation is very forgiving and you've employed good money management so there is very little risk or harm.
I'm also causing confusion because I am talking about adjusting weekly out of habit from working with correlation/carry trade people. I'm sorry. In a well chosen correlation trade you should be in and out in a few hours. If you are in for a week, something went wrong and then you need to work on the adjustments so that it will come back out for you at a profit.
I disclosed that bit about short term divergence on purpose. No accident there. It is the major difference between a true correlation trade and a correlated carry trade hybrid. This works best when one can see some clear strength or weakness in a currency and use that. For example, the upcoming BOE interest rate statement would be perfect for the long/short GBPUSD/EURUSD correlation trade. If we see some clear strength or weakness that is likely to last a few days in the GBP it would give us an idea how to set up the trade.
I am thinking of going Long GBP/JPY & Short CHF/JPY what do you think?
ES
Have you checked the correlation on this?
Remember the mall/sweetie story? The correlation is usually good, but when it decorrelates the GBPJPY usually runs very hard before correlation resumes. That creates very wide price differentials. I've used a 1:3 ratio on this to tame it down.
Have you considered the one we see in all the basic correlation examples? EURUSD/USDCHF?
and the ratio balance...how do you know which side? correlations do not tell you that.
ES
Quote:
Originally Posted by Muddyguy
Have you checked the correlation on this?
Remember the mall/sweetie story? The correlation is usually good, but when it decorrelates the GBPJPY usually runs very hard before correlation resumes. That creates very wide price differentials. I've used a 1:3 ratio on this to tame it down.
Have you considered the one we see in all the basic correlation examples? EURUSD/USDCHF?
and the ratio balance...how do you know which side? correlations do not tell you that.
ES
Good morning!
In this case 1 GBPJPY to 3 CHFJPY is what I have used at times. I've also used 1:2 and 1:1. These ratios are based on expected direction and volatility. The GBPJPY is far more volatile. Definitely a trading pair to scale into cautiously!
Some traders use pip value or swap expectations or some other measure to determine ratios. Me, I usually use 1:1 as my starting point. The pairs above are an exception for me.
Linear Mode
