hehe - reality bites. Is that misrepresentation or not ?

In all fairness no one ever promised me 1 or 2% a day. This is Bill Barnsley's thread and not Bill Youngs trading.

Also the past results did not indicate anything near 1 or 2% a day in Bill Youngs disclosure. Besides the past is the past...

I was not complaining just reallocating and I did not intend to start a "wave of flame"...

Everything seems fine to me thus far with the GoFxPro managed account and I simply reduced my exposure until trading improves.

If I must close my account in a few months then so be it, but that would not mean that the GoFxPro managed account program is not a valid profitable methodology...it would just mean that I had better places to put my money to work at the time.

You are all welcome to go to my blog and follow along...

Bright Ideas


ES

Let's get this thread right back to the original topic: the correlation EA.

Now Bill, I have spent about a week looking at the correlation between these pairs:

EURUSD L USDCHF L
GBPJPY L CHFJPY S
NZDJPY L AUDNZD L

All three of these have pretty nice correlations. Unfortunately, I can't see how you can get an advantage out of a correlation. Basically, the correlation acts as its own pair. It has its own volatility. It swings up and down several thousand pips, even if you trade partial lot sizes.

If I tune down the lot sizes (the ratios) then I reduce drawdown. BUT: I also kill my daily swap.


Mr Barnsley, if you'd be so kind, please explain how to turn a correlation into an advantage. To me, it is pure speculation. I'm sure you have seen exactly what I have alluded to.

__________________
Ideas are not trade advice.

Do you do the Electric Slide?

__________________
Ideas are not trade advice.

I do not know what this is supposed to connotate...but if you bothered reading my blog you would see that my portfolio is up recently?

I advocate diversity and when one part of the portfolio suffers another part is winning. Periodical reallocation is necessary. So I guess you could call this the ElectricBalance...hehe

ES

There is a lot of talk about the drawdown that may occur with C4 (CheckGrid poses drawdown issues as well, but nobody seems very interested in that excellent EA - too bad).

I am not exactly sure how to calculate historical draw down for C4. But since I have nothing else to do but spend my nights trying to understand trading, I took a stab at what I thought might give me some insight.

I took weekly data for the past 52 weeks on GBPJPY and CHFJPY. I calculated the weekly range for each pair and then compared the weekly range point difference for both. Long for GBPJPY and Short for CHFJPY. Weekly Range = Close - Open; Weekly Range Point Difference = Weekly Range for GBPJPY - Weekly Range for CHFJPY. (I'm not sure if this is the right way to do it and would certainly like to hear if someone has a different view.)

Anyway, the results ranged from a run-up of 630 pips for the week ending 1/5/07 to a draw down of 903 pips for the week ending 8/10/07. The average run-up/draw-down over the 52 weeks was .17 pips.

The results do not take into consideration that you might not have entered the trade at the week's open and may not have closed the trade at the close of the week.

Assuming this is the correct way to do it, the results would probably be more useful calculated on a daily time period.

I've been trading the demo for several months and it seems to me the daily draw down has never exceeded approximately 300 pips.

My purpose here was to try to figure out how much money I would likely need in my account to use C4 to earn roll over interest and benefit from occasional profit taking with this robot without having my account shut down by a margin call.

Seems to me that with $1,000 or so you could have traded 2 10k lots over the last year, earned the daily rollover, and made some additional profit with the Take Profit function.

Am I wrong, Muddy Guy? Where would you like the beer sent. You deserve a couple of six packs, at the very least. Am I wrong fellow thread followers?

ES The Electric Slide is a popular line dance done outside the realm of country line dancing. In all fairness, this could be a good marketing tool for your name, as many people will relate to the ES in a different context.

Google for more info.

Hopefully it didn't ruffle your feathers..... Keep being Electric Savant!

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Ideas are not trade advice.

Confused - your nick is most aptly chosen.

That thread title refers to my grid EA. It has never been applied to GoFX.

Misrepresentation? No. Inability to understand what one reads? Yes.

Good morning,

I would like you to go back through the posts from June-ish onward. This is all explained in detail in various posts I have made to this thread.

• Correlation trading is not swap trading. Swap is a bonus.
• Correlation does not act as it's own pair. There is divergence between the pairs that do not exist in "one" pair.
• Correlation trading works because a strong correlation helps protect the trade from unexpected strong moves or random spikes.
• Because the correlation is imperfect, opportunities exist to profit from the broader trend (for example a relatively stronger EURUSD than USDCHF), or from short term strong divergences.

That all said, correlation trading has been more challenging these last two months as I have seen a periodic complete breakdown in the EURUSD/USDCHF correlation, as well as every other one I track. Check out the attached chart to see what I mean. EURUSD/USDCHF is historically strongly negatively correlated (-1) yet I have watched it go completely random (0) and even close to a strong positive correlation at times. This always happens to some degree, but it has happened far more often recently, and sustained the counter-historical correlation longer.

If you consider that these two pairs are supposed to go in opposite directions, and therefore you are taking trades in the same direction on both (long/long for example), and if they start moving in the same direction, AND that direction is opposite of your trade, it will suck twice as fast.

Trade carefully,
Bill

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