I work 9-5 uk time. It can get annoying missing the moves but there are still enough to keep you interested.
I think I have just moved up to longer time frames to reduce risk.
4hr to 24hr charts so that will be easy to trade with a full time job…but not as much fun!
Just adapt it to suit you needs
Yeah! High leverage with pretty small positions allow me to place dozens of trades
I use a swap free account with liteforex. A lot of brokers offer that type of accounts.
I’m thinking about lots of small trades just to limit the risk, also to get more money working! Higher time frames also,
Take a look at 8hr eur/jpy. Cad/sgd
I’ve read through the first pages of posts on this thread and it seems there has been some discussions on a couple of points:
After 1124 posts, is there a general consensus that
-point 1 is a must?
Thanks
Further, apart from Oops, does anyone else have a myfxbook account proving this method is working well?
I don’t fix the scale,
And I think medi experimented weighting the position one side or the other,
I think it works out best to have the SAME DOLLAR value each side of the 2 positions.
I am a fan of arbitrage trading but it requires a lot of patience to reap profits. I already have an indicator which shows relative price change of 2 correlated pairs. Normally I use it see which pair is having more momentum but it can be used to see the relative pip difference as required for this thread trading. Indicator can be downloaded from my blog [here]. Let me know how you guys like it useful for this thread and if we can modify it for better use…
Below screen shot:
Today i finally closed all my baskets for a net profit of 6 %.
They were opened for about 2 weeks.
This system is slow but with great results.
Although this thread is titled Stat Arb, I don’t see how trading 2 pairs is statistical arbitrage at all. For example, lets say you are trading EURUSD and GBPUSD simultaneously. You are effectively just trading the EURGBP pair.
Why pay double the spread opening two positions when you could just trade the EURGBP?
Also going long in one pair and short in another pair when they diverge is simply betting that the EURGBP exchange rate will stay the same over time. This pair trading system is therefore just an inefficient way of range-trading a single currency. Looking at the EURGBP over 2012, it has been on somewhat of a downtrend. Range trading this system could have lost a lot of money.
Any thoughts or advances?
Please read all the thread. We already had the eurgbp discussion.
Stat arb is taking advantage 0f deficiency in a market,
So technically trading pairs is stat arb.
Also what medi said read the thread as there’s lots on the E/G already.
it could be a good test to open on a demo account two baskets, one with EG and the other with EU/GU and leave them working for a month or more, and see what happens at the end of the time, if they are the same, then they should have the same profit/loss at the end of that time, but if they are not exactly the same, as I suspect, then EG is going to have worse results.
Ok, as I suggested, I just created a demo account, placed one basket with EG and one with EU/GU (bought EUR, sold GBP)
Let’s wait until end of next month and see what happens.
WILL BE INTERESTING, BUT WILL YOU TAKE PROFITS AT e/u g/u CROSS?
Damn sorry caps lock!
Nop. I’m only testing which one makes less drawdown.
Alright here is an excercise that may help you…
You do realize that if you divide the price of eurusd by the price of gbpusd… You get the price of eurgbp? 1.2528/1.5837 = .7910 which is the price of eurgbp… The problem that you will have with your test is that the dollar worth of one pip for eurusd and gbpusd is different than one pip of eurgbp. So your total pips of the eurusd and gbpusd account should be the same… I’m not sure the dollar amount will be.
Demo 1: long eurusd +10 pips … Short gbpusd -3 pips… Total is +7 pips … On mini account that’s 7 dollars.
Demo 2: long eurgbp +7 pips… On mini account I think the pip value is 1.6 or something… So 7*1.6=11.2 dollars
Same pips… Different dollar amount
It may be easier to do this test on nzdusd, audusd, and audnzd… Since their pip value are all 1
I think if you are using the two overlayed charts (Kelton’s way) for the entry and exit triggers but instead of buying and selling both you just either buy or sell E/G it would be the same thing. The periods where the E/G trends, your two overlayed charts will still come together and cross (if you haven’t fixed the scale) so you would have a chance to close the trade (at a loss but at least you won’t have huge drawdown). Correct me if I’m wrong.
yeah, your wrong.
