…huh?
Yeah, try nipping over to wilmot.com and asking “so whats this correlation malarky all about then” ? and see what sort of reaction you get !
The threads establishes that there are long term correlations between pairs, that these may fluctuate and mean revert over the short term, how you might calculate correlation, difference between negative and positive correlation and how you might use this information to reduce risk, discussions about fully hedged v partially hedged baskets, a couple of sites where you might find further information and correlation values.
Its nowhere near the worst thread I’ve ever seen.
That too…lol…some don’t have a forum, or if they do you have to sign up, or they may have a comment box and who know when it’ll get answered. No, I’ll just read something and then come back here and ask/post…much simpler. 
ok, so correlations fluctuate and revert, I understand that. But that does not free you from predicting a direction, and being wrong or right.
U/CHF is correlated inversely to E/U, the only thing that causes a “fluctuation” is the change in E/CHF.
If you trade E/CHF, you make money off the SAME EXACT THING, but without paying two spreads.
It’s like you are trading USD/USD for the fun of it.
excellent reply cuban! I agree with quite a deal of what you’re saying and I will indeed post my live account results soon once I get the ball rolling. Thanks for keeping an open mind!
I want to be very very clear about one thing in this thread. I am NOT trading EUR/CHF in a EUR/USD - USD/CHF “hedge”. If you suggest something like this, then you are going down the wrong path…I would suggest you back up, go back to the first post, and start from square one. The goal is difficult to grasp; however, I think that a few people on here…simba, sweet, and a few others for instance will get it in good time.
(Also, if you don’t appreciate what this post is doing, please don’t post…chances are good that you already made your “point”. If people choose to listen to you, then they won’t post and will simply move on to the next topic. To the people that have chosen to stay: I appreciate it and am here to help. I will be in the chatroom for a few more hours. Good Luck!)
I will indeed post my [B]live account results[/B] soon once I get the ball rolling.
I suspect they will be negative.
Offsetting an [B]USD long position[/B] with an [B]USD short position[/B] is a de facto [U]NO[/U] position.
EURUSD short + USDCHF long = NO postion
What you call magnitude is a bet on the different ranges the pairs travel.
A little change in Money flow will get you into trouble.
Another risk factor is the present behaviour of the YEN & most likely coming behaviour of the AUD because of Gold that will have an effect on ALL pairs where the EUR is involved.
Used!! you are sooo close, you basically just stated the strategy but not really xD. What are you talking about? They are highly negatively correlated so, you’re doubling up on that trade set aren’t you?
if you meant buy/buy or sell/sell, i will post the fundamentals behind this perhaps when somebody gets the concept.
I agree entirely, I’m a directional trader, and that is exactly what I’d do !
That does not mean that the concept is without some merit
Well, via THIS particular method of trading, you actually aren’t trading eur/chf…it’s interesting; but, that’s not what you’re trading at all. You figure it out yet simba? i got a feeling you might be the first one
Hey Used, my ol’ pal.
EURUSD short + USDCHF long = EUR/CHF short + 2 spreads.
Sold the Euro/bought the dollar. Sold the Dollar/bought the CHF.
What does that give you? Short Euro/CHF, with 2 spreads.
…I’m quite certain. 
If there are any “ah-hahs” in the chat room…it would be really sweet if anyone would share to those who can’t due to circumstances beyond their control.
Ok, TL, just to make it clear, this method is not about hedging…so it’s not say buying AUDUSD and buying USDCAD…which is hedging isn’t it since they move inversely of each other?
Somewhere else I read is that using correlations is to take advantage in delays of one pairs movement with it’s correlated pair. So if you see a large movement in one pair…whatever direction…then you check the pair that currenlty correlates highest, and if it hasn’t started to move, it theoretically should and I suppose would give you the better profit as the pair that moved first may be finishing it’s move…something like that?
There’s no exposure to the US dollar, but there’s an exposure to EURCHF cross rate (unless you meant that you’d hedge that out by including EURCHF as a third pair)
Also as the two are neagtively correlated, he’d either be buying or selling both.
I agree entirely that the volatility of any of the components in the mix can be affected by external currencies, or markets.
Hi SweetPip, is your firewall an issue at home? or at work? (i think you said work earlier but i am not sure)…if you have the same problem at home perhaps some of us could help you…if not then we’ll see you in the chat room later!
ok, back to FX! if you define a hedge as: the implementation of a financial instrument aimed at offsetting risk. Then yes, it is hedging. For whatever reason when i was posting earlier i had the idea in my mind of hedging differently (after i watched this youtube video if you must know xD). but yes, it is heding, so you would do just as you say. While that is ONE way of trading correlations, it is not a method employed by this strategy. That’s good you are thinking about it though. I will give you another hint. Going back to the DML model…take a look at lot sizes…;D
petefader, you are correct.
Your angle is the EUR & CHF.
You are leaving the USD out.
My angle is the USD.
There is two ways to approach this depending on the model you trade.
If my focus is the USD & I would need to neutralize my USD position for a time WITHOUT killing it I would treat the path I have descibed.
If my focus is profiting either from the CHF or EUR I would treat the path YOU have described.
It depends on what you want to archieve.
I dont think that’s how it works. If E/U moved up on euro strength for 15 mins, but USD was stagnant. Then there is NO reason for U/CHf to move down.
No it’s a work thing…firewalls, proxy servers, etc…can’t install anything unless it goes thru ICT approval first. 
But in a couple hours I should be home and have no problem getting on chat there.
technically…it “could” go down, but whether or not this movement was based upon the crosses movement is highly highly unlikely
USD position is flat, agreed.
awesome, I look forward to it!