Thank you all for your responses!
Currently I am testing both Kelton’s original method (1M, no scale fix, no stop loss) as well as Medisoft’s method (Jedster’s method will be next )
Kelton’s method is quite straight forward (thanks a lot, Kelton!!!).
As for Medisoft’s method, this is how I have set it up:
I open one MT4 instance with the following charts (all with Medisoft’s “keltonprimarypair” template – thanks a lot, Medisoft!!!)
- EURUSD – D1, plus an indicator window showing ATR (default setting 14)
- EURUSD – M15, plus an indicator window showing the correlation, using the indicator “Cor.mq4” with default setting 20 (can be found when searching for “mt4 indicator cor” in google
- EURUSD – M1, no additional indicators
One the second MT4 instance I have the same setup for GBPUSD but with Medisoft’s “keltonsecondarypair” template. This MT4 instance is the one I make transparent using Vitrite.
My current “routine” (can you call it routine if you have only done it a few times?):
- Check EURUSD M15 chart if correlation is 90% or more at the moment. If it isn’t I look for the last time the correlation was >90%. The price at the time then becomes the basis for the next step
- Check daily ATR for EURUSD and fix the scale of the M1 chart accordingly. Basis is current price or the price of the last time the correlation was > 90%. The maximum = price plus current ATR, the minimum = price minus current ATR.
- Do the same for GBPUSD
From then on I keep checking if prices diverge by 20 pips, measured on the MT4 instance that shows the secondary pair (GBPUSD). When entering a trade I use the Kelton EA provided by Medisoft (thanks again, Medisoft!!!). I exit a trade when it shows profit (not quite sure about take profit yet but will stick with 61.8% as per Medisoft’s previous post).
@Medisoft: Does this sound like a reasonable setup to you?
What I am particularly wondering:
- When you talk about ATRs for scale fixing or for determining the lot size, are you talking about the daily ATR with default value (14)?
- How long do you stay in a trade? Currently I am in a trade (divergence was 20 pips) for more than 12 hours and there is no real sign of prices coming closer together. They are just running pretty much parallel, 30 pips apart. As I see it I could
A) Close the trade, accept the loss, realign the charts and look for a new trade opportunity
B) Wait and hope that the prices come closer together and close it at profit
Thanks a lot!