No broker is going to look at this strategy bad, or even know what your doing. And some brokers look at arbitration badly but not this type is where you are taking advantage of the speed of two brokers platforms server.
Hi Kelton,
Very interesting strategy, thanks for sharing your ideas. Hopefully we can all work together and help refine it!
One question, how do you line up the over-layed charts? Do you start them on top of each other at the start of each day and then see where the gaps/differences open up?
I am also trying out the Vitrite software to overlay the graphs but struggling on finding where best to overlay each graph to find the most reliable currency shifts.
Regards,
Dan
I think I found a way to show the last price correctly without requiring two MT4 open.
I use the pixel value on both charts and translate them to the price value of the other chart.
This way I only need one MT4 opened, with two charts, one on EU and other on GU (or whatever pair you are trading)
I place the indicator on both pairs, and the indicators communicate between them with global variables, telling at which window pixel is the price trading.
The other pair receives that pixel value, and translate to its own price value.
After testing and comparing with the vitrite technique, I found the result is equal, with no pip difference between the charts.
And I have the doubt / question about the automatic resize of the screen to fit the prices inside it. What happens if the chart resizes? That could lead to think that the price reduced distances up to touching them, but the profit/loss is still in loss, isnāt it?
Just open both mt4ās and make sure each one is set up the exact same. Zoomed out all the way and on the 1 min chart for both. Push Cntrl+shift+5 on the top window and u will see the other chart cone through
This is a screenshot of the lines with the indicator.
This other one shows the same, but with transparency comparing charts. The red charts are in background, the green ones on foreground. Iām comparing EU with GU and GU with EU. The Green horizontal line is the bid price of each pair, and the red horizontal line is the transformed line based on the pixel technique I suggested.
I see that they match perfectly with the bid line on the background MT4
Guys,
Trading the correlation is quite a common strategy in the large institutions where they normally do it with options. I had previously heard about pairs trading on MT4 but hadnāt really thought about how to do it on a practical basis until I read this thread, at which point I had my light bulb moment. So, a big thank you for creating this thread, Iāve started to trade this on demo to get a feel for it.
One thing I can do is to answer a question from earlier:
Yes, you are basically trading the EURGBP. But if you traded the EURGBP, what would you do, would you buy it or sell it? You donāt know whether the imbalance has come about because the GBP has moved too much, or whether the EUR has moved too much. Also, if the EU goes up, and the GU goes down, the EG might not move at all, and that is another way the imbalance could be created.
By buying the GU and selling the EU (in separate trades), you are indifferent to the USD but are, as Kelton said, market neutral, or at least, you should be. You simply wait until the pairs come back into balance.
Wow, have you made an EA already? Are you able to backtest it? If so, how does it do? (Iknow, a lot of questions:-) )
When I start my bot, I plan to take the last 4 hours(find the optimal time here) and average down so GU/EU have a range beetween 1 and 99, and then place my orders out of this correlation:-)
Now just find out how i do all that:-)
Where is everyone from on this thread? Any body from Virginia? USA
Hi, you can see in the right upper corner of my post, Location, and as you can see I live on a rock next to the North Sea 
Iām from Mexico
Nop, I was not able to back test itā¦ I think it will not work on back test because it need to manage two pairs at the same time, that is not possible with standard MT4 back testing tool.
Iām also working on the idea to calculate the last 4 hours or more of data to know the maximum deviation (lack of correlation) and based on that, calculate the risk. But right now Iām testing that the EA works only with predefined level of stop (on balance, not pips)
I tried to do with percentage of the window, but it didnāt work very good, because graphically the percent is not like Kelton says, and sometimes when the price crosses, the trade is in loss and you canāt close the trade for profit.
How is it that its ending in a loss if they touch? The only way that happens is if your charts are off or you opened a position in which your spread could not be beat
Kelton, why do you prefer AUDJPY with CADJPY instead of AJ and CHFJPY?
I think I have the answer, but I want to hear that from you to see if Iām understanding the technique well
Yes, that was the problem using percents on my past indicator.
The lines must align by pixels, not by percents. Right now they are aligned by pixels (as you can see on the pictures I uploaded), and so far they are working. I placed on a demo account a very big trade, 10 lots for AUDJPY and 10 lots for CADJPY, and the max drawdown up to date is 1.1 %, with a 100k demo account.
Iām logging the trades on myfxbook, if you want to see the results.
By the way, Iām also checking that the pairās spread is 5 pips or less, do that make sense for you?
Kelton, do you know what is your max drawdown? I want to decide which lot size is better, but I need that information hehehe!
I think that pairs should be choosed following this rules:
Very high (85 % or more) correlated on Monthly, Weekly and Daily view, highly (80 % or more) correlated on 1 hour, and historically good correlation (to be correlated more than 70 % of the time) on 5 minutes, but not too correlated on 5 minutes, because a very high correlation on lower time frame makes almost impossible to get a valid trade, we need some uncorrelation on lower time frames to find entries.
And also, that the spread is pretty low, like 5 pips or less.
Kelton, do you agree with this?
Hi Jedster and Kelton, thanks for your patience with my queries and many thanks for your clarifications. This is really educational for me. Iām currently trying to figure out instances of how the EG will not move if the EU goes up and the GU comes down. Can anyone help me with the reasoning? My understanding is that if EU goes up, EUR is stronger against USD. If GU comes down, GBP is weaker against USD. Therefore EG should go up.
Thanks again, everyone!
Hello from a newbie and your neighbor in WV. I canāt THANK YOU enough for the inspiration that your system and you have brought meā¦you have my deepest gratitude. Happy trading!!!
Hi medisoft,
Are you using the OverLayChart-MAwally2 indicator posted by Richard87? How do you get it to work? I dragged it to my EU window in MT4 and an additional indicator window pops up but itās empty. What am I doing wrong?
Hi Medisoft!
Mexico?
AquĆ Veracruz