Correlate or Die!

[purplepatchforex]

Over the last few months as well as my cat and mouse strategy I have been trading a more discretionary approach using another correlation approach.

It never ceases to amaze me how under-discussed and undervalued correlation approaches are. To me it makes perfect sense to look at correlating pairs to arrive at a trading decision, you simply have more information to trade with rather than simply looking at 1 pair on it’s own.

I set up my charts like this

One like that then another with EURUSD and another with USDJPY and also the same with 30 second but only covering the last hour or so.

I then use the Fib tool and look for similar patterns, if you got EURUSD and USDJPY going down then EURJPY will go down, I can’t answer how and when to enter, it is purely discretionary, but I am getting some excellent results and can’t remember the last time I had more than 1 losing trade in a row.

Oh and price action is really important for entries, just look at it, if it’s speeding in one direction it’s unlikely to stop.

Give it a go, I’m sure you’ll find it a revelation

[Raza]

I was just going through your cat n mouse thread and i must say your method is very interesting.

I know many have asked you this question on your other thread but how many pips do you aim using this particular method?

and do you enter ‘immediately’ when you see the two pairs going down OR do you wait for some other signal…?

[Master_Tang]

I fail to see how not using correlation, results in a measurable mortality rate.

[finally]

Over the last few months as well as my cat and mouse strategy I have been trading a more discretionary approach using another correlation approach.

It never ceases to amaze me how under-discussed and undervalued correlation approaches are. To me it makes perfect sense to look at correlating pairs to arrive at a trading decision, you simply have more information to trade with rather than simply looking at 1 pair on it’s own.

I set up my charts like this

One like that then another with EURUSD and another with USDJPY and also the same with 30 second but only covering the last hour or so.

I then use the Fib tool and look for similar patterns, if you got EURUSD and USDJPY going down then EURJPY will go down, I can’t answer how and when to enter, it is purely discretionary, but I am getting some excellent results and can’t remember the last time I had more than 1 losing trade in a row.

Oh and price action is really important for entries, just look at it, if it’s speeding in one direction it’s unlikely to stop.

Give it a go, I’m sure you’ll find it a revelation

If you see eur/usd and usd/jpy going down, what method do you use to determine when to enter short eur/jpy?

Thanks

[petefader]

Over the last few months as well as my cat and mouse strategy I have been trading a more discretionary approach using another correlation approach.

It never ceases to amaze me how under-discussed and undervalued correlation approaches are…

On an e/j short, you’ll know that the euro is weaker than the usd and the yen is stronger than the usd. Makes sense.

I usually trade e/u and g/u, so I’m watching e/g on the side…similar idea.

[purplepatchforex]

I fail to see how not using correlation, results in a measurable mortality rate.

I could tell you, but if I did I would have to kill you

[purplepatchforex]

Here is a great setup for a EUR/JPY short

There’s never any guarantees remember but this is a typical thing I would trade

[purplepatchforex]

And there we have it, a minimum of 20 PIPS there, you could have gone in, at about .69 / .70 on the 30 second chart, and as I’m writing this, it is at .33, shame I didn’t trade it, but I’m not braking my rule of quit while you’re well ahead already!

[finally]

And there we have it, a minimum of 20 PIPS there, you could have gone in, at about .69 / .70 on the 30 second chart, and as I’m writing this, it is at .33, shame I didn’t trade it, but I’m not braking my rule of quit while you’re well ahead already!

Do you exclusively trade the 30 second charts with this method?
How do you get a 30 sec. chart on MT4?

I think it would be a good idea to create some mechanical signal, based either on PA or indicators or both to enable you to know when to enter eur/jpy after eur/usd and usd/jpy start moving together. I’ll experiment and keep you posted. I hope you’ll keep posting your ideas.

[purplepatchforex]

I have the charts up as in the image, but I have dual monitor and have my 30 secs on the other screen, you can’t get 30secs on MT4 as far as I know, I use Oanda, so use the 1 min, the thing is though, you want to get rid of all those candle charts, dump them, no use at all, they only serve to confuse the eye.

Why use MT4 though, why not trade with Oanda? or do something totally the opposite of what a lot of people do i.e. use Oanda for charting and trade with MT4, this is what has really transformed my trading this last year, just thinking a little different.

Right very important this, NO MECHANICAL SIGNAL, very important this, the actual price movement is very important, you will need to study it carefully, I even just trade support and resistance breaks for 10 - 20 PIPS, if you got the 3 pairs flying down, they are unlikely to just stop so you can the just pick a trade off, but that is not for the inexperienced, start with setups, then move on to trading plain price action. So you can’t make a mechanical indicator, plus the other important thing as you can see is shapes, the 3 shapes in the above trade are similar, and it is impossible to write a program that will do that.

NO indicators, candlesticks in themselves are indicators, so I have even removed that indicator, the only indicator I have got is the price - that is all you need, and Fibonacci, which is not an indicator but a measuring tool.

Remember - Very Important - Price movement in itself

Hope it helps

[finally]

I have the charts up as in the image, but I have dual monitor and have my 30 secs on the other screen, you can’t get 30secs on MT4 as far as I know, I use Oanda, so use the 1 min, the thing is though, you want to get rid of all those candle charts, dump them, no use at all, they only serve to confuse the eye.

Why use MT4 though, why not trade with Oanda? or do something totally the opposite of what a lot of people do i.e. use Oanda for charting and trade with MT4, this is what has really transformed my trading this last year, just thinking a little different.

Right very important this, NO MECHANICAL SIGNAL, very important this, the actual price movement is very important, you will need to study it carefully, I even just trade support and resistance breaks for 10 - 20 PIPS, if you got the 3 pairs flying down, they are unlikely to just stop so you can the just pick a trade off, but that is not for the inexperienced, start with setups, then move on to trading plain price action. So you can’t make a mechanical indicator, plus the other important thing as you can see is shapes, the 3 shapes in the above trade are similar, and it is impossible to write a program that will do that.

NO indicators, candlesticks in themselves are indicators, so I have even removed that indicator, the only indicator I have got is the price - that is all you need, and Fibonacci, which is not an indicator but a measuring tool.

Remember - Very Important - Price movement in itself

Hope it helps

So, you just use a line chart indtead of a candle or bar chart?

[purplepatchforex]

It’s the min/max style option used in Oanda, you can probably do the same kind of thing with 2 1 period moving averages on the open and close.

I trade with the charts exactly as you see them above and the same with my 30secs, except they are smaller and cover the last hour or so.