Kelton, are you still using this strategy?
[QUOTE=âFreeSoloing;548424â]Kelton, are you still using this strategy?[
Sort of lol Iâm using some correlation aspects in some experiments Iâm working on. Mainly with RSI. I just hit three 100+ pip trades in a row yesterday. Iâm in a long position now in GBPUSD that I got in a few hours ago at 1.59368 now at +26
Iâll let you know when I get out of it and the outcome.
New trades! My last 6 were all called perfectly. The amount is in $ but itâs 521.9 pips Itâs a large demo trading 1 lot at a time
Hi. Yes, i tried stats/arb trading and was not very successful. I mean, take a look at AUDNZD today and you know that this can be as dangerous as any other trading methodâŚ
Oshun123
Hi Kelton & everyone
How do you overlay two pairs in one charts ?
Is it possible to do so in MT4?
If so please tell me the steps.
Thank you !
Hi â This is more a question for FXEZ. Earlier youi had posted a chart which showed the EURGBP plotted against the EU-GU spread which seemed pretty similar but the volatility was different according to lotsize. My question is this â How do you get the chart for the EU-GU spread?
Thanks,
J
Yeah - this is what I am asking about â how do you plot the difference between EU-GU on metatrader? Thanks
U know what guys? i tried trading using Keltonâs method. Earned a 200 bucks on one demo and the other 100 bucks, using 2 brokers. But later things went awry and the correlations between the pair changed! Sorry as a newbie, I thought it would remain the same, but it changed and now im going into the negative zone at $700 loss.
My question is how do we deal with sudden change in correlations when we are half way in the trade?
EUR/USD and GBP/USD has a correlation of 7.3 now on forexticket⌠should I hold onto the losing trade till the correlation improves? Or would it be better if I stop the trade nowâŚ
How could I know where exactly to buy and to sell
I am assuming that this strategy did not end well for the participants? The thread is dead and all of the linked myfxbook accounts have been deleted.
NinjaTrader offers a much better solution to overlaying the charts. It is subjective rather than objective. Therefore your unrealized PnL is based solely on the spread of the instruments. If they touch and you miss it, no worries - it will happen again.
This seems like a decent trading strategy as long as you do not get greedy. But the rapid growth seen by most of the traders here was anything but sustainable. I think timehopper was on the right track in being able to sustain a 1000 pip deviation before doing any damage to his account.
Avoiding interest rate decisions is a no-brainer and I donât know why that wasnât practiced here. I donât plan on using this as my main strategy but I would like to play with it and maybe revive this thread if there is interest.
Instructions to set up NinjaTrader for StatArb trading:
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Download the NinjaTrader Demo for free. It will allow you to do charting, but not live trading. I have been doing my charting in NT and then I just place trades in MT4.
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Get a data feed. I am currently using FXCMâs data feed as they are my broker. Hopefully your broker offers a NT demo data feed, if not sign up for FXCMâs.
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Go to File --> New --> Chart. Type âEURUSDâ into the box and hit enter. Then type âGBPUSDâ into the box and hit enter.
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Select GU and find the âVisualâ options on the right. Change âPanelâ to [B]1[/B] and change âScale Justificationâ to [B]Left[/B]. Change the colors so you can differentiate it from EU. Hit OK and your chart should load.
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Double click on either axis. For both âLeft Scaleâ and âRight Scaleâ change the âBased onâ option to [B]EntireDateRangeSeriesOnly[/B].
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Hold the Alt key and press the UpArrow key until the candles wonât get any smaller. Hold the Control key and press the UpArrow key until it wonât zoom out any further.
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Drag and adjust the left scale (which should be GU) until the pip size per box matches the scale for EU on the right. For example, a box on my right scale is 1.36-1.3585 = 15 pips. So I dragged GUâs scale until I got the box as close to 15 pips as possible.
Thatâs it, now just look for trades.
With only 6 hours left to go before the market closes, I will not be entering any new positions today. ECB Draghi is due to speak Monday at 13:00 EST, and I am not comfortable holding a trade through that period based on how much influence he has over the Euro. The rest of next week is clear as far as I can tell when it comes to news releases. I believe avoiding high-impact news events which could shock the correlation is a key factor to success with this method. If the correlation is thrown out of whack by a large number of pips, it would be better to enter then instead of holding a drawn down position from a 20 pip spread and praying it comes back.
I had a modest gain of +0.54% this week using this method, but I have not fully developed and enacted my risk plan. I need to go through some historical data in order to determine those parameters. I believe my risk is a bit high right now, but we shall see.
I saw a 30 pip spread last night so I placed my orders and set my platform to close out after 20 pips of profit. GBP/USD had a huge move which closed the gap and then carried it further to cross over. The pair moved over 50 pips in a minute, and I guess I wasnât able to be closed out until +40 pips rather than the 20 I was initially shooting for. Not going to complain about that.
Hereâs my account results for the last week from trading this method. As it stands I would be able to handle a 1000 pip deviation before being margin called and losing my little $100 account.
Itâs worth noting that I am only playing with about 1% of my total trading equity in this little experiment. I need a lot more time with it under my belt (as in several months) before I consider putting any significant amounts of money on the line. I would urge anybody else who decides to pick up this system to follow a similar path.
Iâve entered another trade long EUR/USD, short GBP/USD. There is a 70 pip spread (the largest I have seen thus far) and I am going for 60 pips net profit.
There seems to be a âbalancing actâ with the risk in this system. Too high and you will blow out on a normal spread. Too low and you will hit a black swan before gaining enough profit to offset the black swan.
Some questions which have still not been fully answered yet in this thread:
[ul]
[li]Is it even worthwhile to use stop losses with this type of trading? As we can never know when the black swan will occur, stopping our losses would imply that we knew the black swan was occurring then and there.
[/li][li]What is the ideal risk?
[/li][li]Does averaging down do more harm than good? I would hazard a âyesâ as it seemed all of the previous posters (who we can assume failed with this method) were averaging down.
[/li][/ul]
My account is now up 7.18% after closing out that last trade. I messed with my charts too much so I ended up closing out for about 20 pips instead of the 60 I was initially shooting for. The scale got all wonky somehow so I decided better safe than sorry.
I had a 6% drawdown at one point, but I held on to the trade. It took 3 days to come back and touch. I was tempted to add more positions but my tiny account could not handle the margin.
Another successful week with this method.
[QUOTE=âjadd806;642992â]My account is now up 7.18% after closing out that last trade. I messed with my charts too much so I ended up closing out for about 20 pips instead of the 60 I was initially shooting for. The scale got all wonky somehow so I decided better safe than sorry. I had a 6% drawdown at one point, but I held on to the trade. It took 3 days to come back and touch. I was tempted to add more positions but my tiny account could not handle the margin. Another successful week with this method.[/QUOTE]
Whatâs good man, this is actually my strategy. I stopped trading it after a while because of my actual job. But reading through the thousands off post on it, it seemed to lack something to minimize the risk. I still fully believe in the concept but not sure what I was missing.
When you say subjective vs objective⌠What does that mean? My biggest issue was the charts repositioning themselves after a while so what looked to be a profitable position at one point turned into a negative one.
Thanks for your input. I really appreciate it. A lot of work when into finding this stuff out for myself a while back.
-Kelton.
Glad to hear that you didnât blow up using this method! And thanks for sharing it in the first place. Would be nice to hear from the others that were using it but I guess they are not using BabyPips any longer. So I just kinda assumed everyone blew up, lol.
You didnât have to stop because of work. I have an EA which closes all trades when a specified amount of unrealized profit is reached. So I just use the gap size in pips to calculate what my profit should be when it closes, and then I can leave MT4 running and walk away.
I think NinjaTrader fixes the subjectivity problem. Once you modify the scales, they stay the same way until you adjust them again. As compared to MT4 where it repositions the chart according to volatility.
Risk management is my main problem too. There has to be a balancing point between trading large enough that your pips are meaningful, yet not so large that you will be margin called on a normal spread between the pairs.
Ya risk management was the biggest obstacle. I believe one follower mentioning 400 pip spread between the two pairs was the largest he has seen in past years data but idk if thatâs accurate especially since the charts would re adjust. I opened two demo positions now with eu and gu. And with eurjpy and usdcad. I am waiting to see how those close out.
I really like the ninja trader platform for layering the two pairs.
Also did you make the ea or find it online for closing out your positions?
Thanks for the input man!!
Also I see your from road island! Iâm from dc. But I have a friend who lives up there. Itâs rare to find someone on here thatâs lives relatively close.
I found the EA online. It does only the one job but it does it well. Here it is:
CloseTrades_After_Account_Profit_Reached.mq4.zip (969 Bytes)
Iâm also in the EU/GU trade since this morning, and it has not moved much.
I agree about the trouble with testing past data⌠I guess the best way to find out is just to forward test it and see what happens. Iâm not too attached to my little $100 account so if it goes boom, no big deal lol.
It is nice to see someone nearby!