You have talk! Until this system, I was not able to get a week of consistent profits.
This was convinced me to start trading live (with small account) but after more than 13 % in two days (live) and more than 6 % on 1 week winning consistent profits on demo account, I think that at the end of the month I’m going to make some new deposit to my account.
Great. Friend me so I can keep up with your progress.
GKFX spreads are all fixed. Alpari are not. I personally prefer the fixed spreads. They are not the best, but I’m happy to give up a few points for the fixed spread. OTTMH, major spreads for GKFX are:
EU = 1.5
GU = 2
EG = 1.8
AU = 1.7
Hello medisoft,
are you using MT4 with the overlaying of windows using vitrite?
best regards.
-guandi
Note, as I write this, (08:44 GMT) there is a big divergence taking place, currently the pair have moved by 5 SD and it is still growing!!!
Rightly or wrongly, I won’t be trading this. This is because, the divergence is directly related to strong news for the GBP and as a result, Sterling is strengthening accross the board. Obviously, the EURUSD is totally unaffected by news that only affects Sterling, hence we see a big divergence. But this is not a divergence in correlation, if that makes sense, it is appearing because Sterling, by itself, has strengthed.
I am sure this is a slight over-reaction by the markets, so I think we’ll see it come back a little, but that’s my view of this divergence. Hard to stay out when there appears to be potential… Lets see what happens…
sweating bullets. huge gap bewtween eur/usd and gbp/usd. I entered too large of a position for this kind of big move apart.
UPDATE: I already had trade going in with the gbp as noticed by the entire world the spread moved against my position big time. my solution is simple. I’m adding more to my positions.
@oakman What time frame are you using?
1m time frame. entered yesterday.
That is the key to trading this IMO
start with small amounts and add if it moves against you
it will limit your profit if it moves in your favor right away
but its better to have room for drawdown
I concur… This is an over reaction by the markets, I’m waiting for a pull back to begin and then I will add more to MY position. if this is 5 standard deviations in your time frame AND I WERE IN THE SAME POSITION AS YOU then I WOULD WAIT UNTIL IT IS WITHIN 4SD THEN PULL THE TRIGGER. Empirical rule states that 99.7 percent the moves will be within 3 sd of the mean under normal situations. this is clearly the .3% . this large move will have the effect of changing the mean by a good bit after it is done so keep that in mind.
AGAIN THIS IS A NOTE AS TO WHAT I WOULD DO IN THIS SITUATION. I AM NOT AND CANNOT ADVISE YOU TO GET IN. YOUR RISK TOLERANCE AND SITUATION IS DIFFERENT FROM MINE AND I AM NO LONGER LICENSED TO GIVE INVESTMENT ADVICE ON A PERSONAL LEVEL. ( RETIRED)
How did you decide upon your position size when taking the trade?
I’m assuming you haven’t got a stop in place but what sort of target were you aiming for and, did you give any consideration as to what you were going to do if the position moved against you?
Yesterday I entered the trade when eur/usd and gbp/usd were 22.5 pips apart. bought eur sold gbp. 1m charts overlayed. scale to fix not checked. zoomed all the way out. right now pair is about 5 pips apart and I am down 93 pips.
Marvin The Martian “Give me all your pips you greedy earthings or I will vaporize you with my atomonizer.”:48:
Well I can’t comment on the chart overlay as I don’t do it that way, far too unreliable and fiddly (in my opinion). Of course, if it suits others and works for them, then great.
Yes, the divergence widened today, so any position open from yesterday will now be worse off, however you are saying that your chart is showing the divergence has reduced from 22 to 5. It sounds like something is definitely not right with your setup…
What do you use to signal a trade entry?
edit: nevermind i see.
I wish I knew.
Check out my post 291:
http://forums.babypips.com/free-forex-trading-systems/43659-statistical-arb-pairs-trading-strategy-30.html#post340746
thanks for your response
hey oakman are you still on?
I’m using a method very similar to Jedster’s one, I found that more reliable and don’t rescale with time.
Kelton said at the beginning of the trade that you should use small lots to allow you to add to the trade. There are plenty of trades every day on this pairs:
EURUSD/GBPUSD
AUDJPY/CADJPY
AUDCHF/NZDCHF
EURJPY/GBPJPY
so you can place small trades on each one and win profits from they all, and not need to risk a lot on each trade. Right now I’m winning more than 1 % daily with this strategy, pretty good, and really, small wins compound to form HUGE profits! But if you size your trades larger, then you could be stopped out before the pairs revert to their correlated status.