my charts look the same as yours too… only, I had a lot less trades.
is this a typo? when eu is above gu, should NOT we sell EG since we hope eu drop and gu rise to converge?
[QUOTE=pipcompounder;350005] look to see which pair is below the other…so right now the GU is under the EU, 20 pip gap, so since EG has the Euro as the first, or primary currency, I sell EG…yesterday the EU was above the GU, so I was buying EG…if you put BB on, it gives you a clue, too.
QUOTE]
creative idea, you are definitely right. that’s a much better way to tell who is above and who is under. it fits my observations. i’ll apply this.
great! I’m recollecting data right now, to analyze it and extract the best levels of profit and loss.
The process will take some time, maybe various days, but right now it has about 1000 simulated trades. With a TP of 10 and a SL of 10 pips, the figures are this:
totaltrades | winners | losers
-------------±--------±-------
1001 | 992 | 519
you can see that winners+losers > totaltrades. This is because in my query to the database i’m creating I don’t check what happens first, if TP or SL, but simply substract 992-519=473. Assuming that the SL hits before the TP, this has a bad w/l ratio with 1:1 RR.
With 10 pip profit and -20 stop loss:
totaltrades | winners | losers
-------------±--------±-------
1196 | 1188 | 334
That gives 1188-334=854. So this has a W/L of 854/334=2.556, and a R:R of 2:1 = 2, so with a 10 pip take profit and 20 pip stop loss this system is a winner 
I’m using data from September, 1999. I’m going to post again the calculations when I gather more data.
NO TYPO, CHARVO,
just trade this in demo account yourself, when EU pair is higher on chart than GU, you sell EG, it goes down when pairs converge…E is primary, first…G is second, last, opposite, etc…
today I have been selling EG at 0.8040 and TP at 0.8035 and everytime at 0.8040, EU was about 33 pips above GU on chart and then they would come together to about 23 pips apart, using EU price scale…when I say higher I mean the graph drawn on the chart is higher, not the price (we know 1.58 is higher than 1.27)…see medisoft’s posted pic a few posts ago, you’ll see the green EU is higher on chart than red GU.
I’m still in 
and the oldest trade has 175 pip loss. No visible signs of reversal soon
Yup, me too…I hope it reverses soon, the pound continues to fall straight down, while euro wanders around, mostly up.
I see that on 1 minute view, the three of them (EU/GU/EG) are downtrend, with GU in a stronger downtrend.
Another thing I’m noticing doing trades manually is that maybe the right entry signal on this system is:
When EU is above GU and EU is in downtrend and GU in uptrend and EG in downtrend, then sell EU/GU
When EU is below GU and EU is in uptrend and GU in downtrend and EG in uptrend, then buy EU/GU
all this on 1 minute view, and also checking the distance from the lines (divergence). I’m going to backtest with this change. Currently I’m doing the inverse, I’m entering trades when both are diverging more, not when they are showing signs of converging.
Take a look on this chart:
You are going to see 3 vertical red lines, EU and GU on 15m with vitrite and a new indicator I just finished.
From left to right.
The first red line indicates a situation when EU is below GU, so that would be a buy EU sell GU, but in the indicator it shows that EU (green) is above GU (red), the gray line is EG.
If one enter buying EU and selling GU on the first line, the trade would be exposed to a divergence increase, while if using the percent variation one entered selling EU and buying GU the trade could be finished for profit two or three bars later.
The indicator is drawn using percentile variation from previous bar, so when you see a pair going down, that means that period was a negative variation, inverse if up. Correlation measures percentile variations of the correlated pairs, so this chart is a correlation chart for three instruments at the same time. Because they are charted in percents, they can be placed on the same chart without any visual trick like vitrite.
What I’m thinking is if one can trade based on this information, instead of using the price.
I’m going to calculate the standard deviations on that chart, and test on demo to see what happens.
Some new trades closed :), and some old trades also closed with profit! pretty good!
I think the london time is the best for EU/GU!
Here is an idea: would it be possible to create a SMA using both EU and GU prices? For example, first divide or substract GU/EU prices, then divide by number of periods? Then, apply it to one of the charts, say GU, using vitrite overlay Eu chart on it, then check how far will prices deviate from that moving average? If EU prices are above SMA, and GU prices are below SMA by a
certain percentage, then we would sell EU and buy GU and close trades when prices come back to each other. This SMA
would be an average of GU/EU average. Is that even possible? Could someone create this? Any thoughts on this are welcome.
Yay! Price finally came down, closed my trades, too, seeing new gaps…
I would like to upload some pics that show overlaying charts made by vitrite, but I don’t know how. Can someone help me with this, please?
I have a theory that is only half-way thought through and maybe someone can help complete it by bringing your thoughts to the table…
first, a premise: I trade the 1 min TF, like Kelton, so that I can make short term profits because the gap will close again within a short time period, usually less than 24 hours (yes, yesterday was weird that way). sometimes with hugh moves, the charts realign themselves, which is fine if no trades are open, because then if gap opens it’s accurate for that short time span (less than 24 hours).
ok, now, since EG shows accurate ratio between EU and GU price mathematically, what if the charts could be moved to show the price scales on right to show that ratio…i.e., when EU chart has the price of 1.2700 overlapping the GU price of 1.5800, will this produce accurate “gaps”? this doesn’t mean actual price, just aligning the charts up or down until the GU price 1.5800 showing thru the EU chart, using VItrite is overlaid on top of 1.2700…this may not have benefit at all to this type of trading, but I just thought it might actually have total benefit…when I did this myself, the pairs showed mostly correlated, overlapping each other, with a few gaps…the application of this idea would involve fixing charts and being able to have much head room above and below the price range.
Thanks PipC, i misread your post.
interesting idea, Mari.
let’s see, firstly, divide EU with GU price:
i’m wondering if this case is mathmatically identical to trade a SMA on EURGBP itself. when eg is much higher than its SMA, we short, and vice versa. i’m not sure…
secondly, substract GU and EU…, now this seems really a gap indicator now. but if this cap is widening(narrowing), how do we know it is due to eur’s crazy move or gbp’s? i guess we still have to use “overlay image”… but this “gap indicator” does provide a quantity tool instead of pure visual decision…
40 pip gap, now…selling EG at 0.8059 with 0.8040 TP
You are thinking about having a common SMA for both? with the same value on both charts? That could be good comparation method, but it will not be visible on 1m because the idea is to have a median between EU and GU, that is (EU+GU)/2 and that will give something about 1.4.
With this, EU will be always below that SMA and GU always above. Then you can get the standard deviation using that SMA for the mean and that could leave with something to compare which pair is above that standard deviation and which one is not.
If you can give me an example on Excel on how to use this, I can code it as an indicator for all of us
This is like Jedster trade, only using bollinger bands to make “much higher” a definite thing
I did some very nice trades on the London’s time. About 6 successful new trades and closed some of the old trades, but not all of them.
I think that maybe trading the pairs which market is open is a good idea, for example EU/GU works pretty good on London’s time, but for me on my daytime it doesn’t work very good, it takes too long to close a trade and sometimes it takes days or weeks.
So for EU/GU maybe the 0:00-4:00 CST is good time because that period of time is when more volatility is (just before and after the market opening) for EUR and GBP, but low volatility on USD.
For NY time, I can trade UJ/CJ because USD and CAD are open at the same time, while JPY is closed and has low volatility, this from 8:00 to 12:00 CST
And for the Asian market maybe AU/NU because AUD and NZD are open and have enough volatility while USD is low volatility there, this about 19:00-23:00 CST
What do you think?