Correlation and Hedging Revisited

[Eric Johnson 10]

Here is some theoretical thoughts on the beauty of correlation trading.

1. First your trend dynamics become circular expansions (line overlay stretches), no longer linear trends that may not return to a price level ever.

2. You discover more trading opportunities because you have inter pair dynamics, not just regular single trend progressions that are worth reversing.

 

3.When looking at the EJV historically it shows so clearly the contraction of all of the stretches for decently correlated pairs. You are on the side of the large hedge funds and central banks that have to keep their currency in a range to keep product export prices viable. You just rest easy as the profit loses fluctuate until you are well in the profit.

 

4. You can do normal chart trades in a new manner. I wanted to go long EUR/GBP last week due to the bottom formation. I did this by combining with another stretched correlate pair short. The EUR/GBP went against me down, but the correlate pair made up for the loss. Now I can wait for the pairs to contract. Or if the EUR/GBP does rise powerfully, I can take the profit. The correlate pair should have taken offsetting losses in the process. I then look to undo this loss, with another fresh pair that is stretched. I put EUR/GBP money locked in my account profit. Also had the good chance that losses on the correlate pair were not so much due to contraction. Now I am in the position of money taken as profit, and entered in the new stretch that should close with further profits.

 

5. As in # 4 if you have unusually powerful trends, you can take profits on the winning side, and re-enter on the pullback, or introduce a new stretched pair. Just have a good reason to exit and take single side profit, like strong price resistance, or an extraordinary pip range run that is likely to retrace.

[Eric Johnson 10]

Here is some theoretical thoughts on the beauty of correlation trading.

1. First your trend dynamics become circular expansions (line overlay stretches), no longer linear trends that may not return to a price level ever.

2. You discover more trading opportunities because you have inter pair dynamics, not just regular single trend progressions that are worth reversing.

 

3.When looking at the EJV historically it shows so clearly the contraction of all of the stretches for decently correlated pairs. You are on the side of the large hedge funds and central banks that have to keep their currency in a range to keep product export prices viable. You just rest easy as the profit loses fluctuate until you are well in the profit.

 

4. You can do normal chart trades in a new manner. I wanted to go long EUR/GBP last week due to the bottom formation. I did this by combining with another stretched correlate pair short. The EUR/GBP went against me down, but the correlate pair made up for the loss. Now I can wait for the pairs to contract. Or if the EUR/GBP does rise powerfully, I can take the profit. The correlate pair should have taken offsetting losses in the process. I then look to undo this loss, with another fresh pair that is stretched. I put EUR/GBP money locked in my account profit. Also had the good chance that losses on the correlate pair were not so much due to contraction. Now I am in the position of money taken as profit, and entered in the new stretch that should close with further profits.

 

5. As in # 4 if you have unusually powerful trends, you can take profits on the winning side, and re-enter on the pullback, or introduce a new stretched pair. Just have a good reason to exit and take single side profit, like strong price resistance, or an extraordinary pip range run that is likely to retrace.

[AltosTrader 10]

I will be spending the week watching this and trying to develop a feel for it.

Cheers,

Michael.

[AltosTrader 10]

Ho, this is a handfull. I note you have 90 pairs charted. I don't know if they are all viable for active trading - time will show, but what is clear is an EA is needed, to open would be good but particularly to close any pairs in profit. I have an EA that would do it but since one can only use 1 x EA / chart it would become messy. There is the Multi Purpose Trade Manager but I am not currently sufficiently familiar with it to know if wholly suitable.

 

What are you currently doing to close ? I am just taking small positions from the stoch difference charts and have activated the currencies in the display to get a better feel - as a beginner. I will move to the EJB shortly. Do you have many open positions - ie say >15 or do you hold out for fewer but bigger and not require a closing EA ?

Regards,

Michael.

[Eric Johnson 10]

Well the good news is that there is only about 20 pairs that I use on any (all) of my charts. All of them are tradeable on Oanda, and the average pip spread is 3 pips, max like 6 ( if you are running hundreds of pips the one time spread is viable).

 

Here is the structure. Each hourly overlay chart is for a base pair, and is shown as a white line. I selected any pairs that had high correlations to the base pair for extended periods of time, and that is what you see on each tab. The 5 minute line overlays are the same charts, just time changed. So of course you have a massive number of correlation comparisons, and some duplicates.

 

The stocastic tool charts are set default to 5 minute. I used them only for radar to check EJV. Stocastics are hard to mirror price movement with. The profile was built based on the line overlay combos. Same thing, some duplicates. I think the alert for that indicator default was 65, not high enough for trade entry in my opinion.I think that 5 minute charts are likely to be overpowered by hard long trends. You can change the stocastic indicator to 1 hour by changing the chart time.

 

 

The EJV charts are not hard to use if you can get the profiles running, the layout work is already mostly done, but the 5 minute charts need tuning more often. They are being progressively built as I see a line chart comparison that I want to check out.

 

The art to trading correlation is to weed out distortions and get precise comparison tools. The EJV is the best I have found. It is real pips, you tune it for historical perspective, and it is not constantly distorting.

 

Waiting on hourly bar stretches can seem lengthy for the first time. Once you get going you seem to have residual profits running for weeks at a time, and can stay busy locking in profits. Often times it is locking profits on the winning half of a pair, and coming up with another pair to replace it, that is still stretched.

 

For exits, the process I just mentioned of switching pairs is a good way. . You should gradually reduce lot size to take profits, many times to reenter upon re-expansion. If the market (EJV) not longer appears stretched then just exit the entire trade with a profit. If a stretch goes flat for a few weeks, lighten your positions, it can expand further.

 

For a stop loss, If you get caught into a news driven mega trend, you can lighten position sizes, take a partial loss, and reenter when you see clear retracement areas on the actual normal charts involved.

 

It will take time to realize the art of using absurdly small lot sizes. I do mean 400 pip ranges are what you are working with. I set my default order entry stops at 280 pips and change them larger all the time.Of course there is near equal profit on the other half of the pairs.

 

When you get in the cycle of waiting for steep stretches, clear range reversals, and proper gradual lot additions it becomes a smooth running profit machine. I trade about 10 single pairs at once. I could build an EA from the EJV, but I like to personally monitor major news. for example I want to take many profits before the US unemployment report.

 

Keep in mind that you are mostly reversing large individual trends, so use any long term reversal skills you want to assist you. The correlation aspect offers an insurance, and added benefit of historical contractions to profit from. It is very different than normal trading, where you do not know if price will ever come back to your entry level. In correlation trading a couple like EUR/USD and GBP/USD they have a super predictable expansion and contraction range.

Edited November 30, 2011 by Eric Johnson

[AltosTrader 10]

Hi Eric,

Have been discussing this at FF as you will know, that is where I got interested in the correlated approach. One fellow, MaxDoom, has made an EA which may be usefull and can be found at Hedge and Correlation Strategy - Page 230 @ Forex Factory . Oh ! Seems the url does not show correctly but the link is still valid - should take you straight there. I will be considering its use in addition to other approaches such as your own which appeals to me. There are also some other EA's in the thread but they only handle a single pairing. Max's EA handles 10 lots of ten trades so allows some building of positions.

 

Of course you may have no interest but that is up to you. At least you know it is there.

Regards,

Altos.

 

Oh yes, on another thought - Considering your more extended experience with this, would you mind pointing me toward the pairs that you do actually trade ? Thus giving me a bit of a head start in sorting out what I should be concentrating on and what will likely could be a waste of time. I appreciate I can resolve this myself in time but that little help would be very much appreciated.

Thanks again.

Edited December 3, 2011 by AltosTrader

[Eric Johnson 10]

Oh, I sure do appreciate the EA, I am spending the weekend building them. I am working on hourly bar scalps, based on extensive parameters. I want to have scalping happening, especially when the hourly hedges are not stretched.

I need to catch up with the other thread, I think correlation trading is the best way to win consistently with small lots, and big runs. So here is my list of currencies that I monitor.

AUDCAD AUDJPY AUDNZD AUDUSD CADJPY CHFJPY EURAUD EURCAD EURCHF EURGBP EURUSD AUDCAD EURCHF CHFJPY GBPAUD GBPCAD GBPCHF GBPJPY GBPUSD NZDJPY NZDUSD USDCAD USDCHF USDJPY SILVER

 

As you can tell, that gives many interactive combinations. These pairs were still not enough for me, so I went into hedging forex against stocks, indices, and futures. My problem is that with metatrader the historical backfill for stocks is limited.

 

Hour bars are slow moving, and the more choices for great expansions I have, the better my trading. There are some decent overlay charting sites, but I will not trade without the EJV perspective.

 

There is another way to trade that I have not mentioned, it is with the line overlay charts, using the cross hair click and drag measurement tool, and setting max stretch measurements for pairs. There are some details to getting it correct, but the distortion factor is still there. When the pairs are at max stretch, it is a money bonanza. Anyhow back to programming. Hope your learning curve is quick.

[AltosTrader 10]

HAH ! Maybe I should have asked "What pairs DON'T you trade"?

 

That's good though, now I will know what is best to exclude.

Many thanks.

 

I guess you know there is another discussion going on at Steve Hopwoods forum. I understand there was some friction at FF, dunno about what, but Steve has opened up his own forum. In case you did not notice at FF, it is stevehopwoodforex.com • View topic - Co-Integration System

 

Might interest you.

Cheers.

[AltosTrader 10]

Well Eric, although only one week of casual trading I hit 11.82 % profit trading from the 5 minute Stoc Hybrid. Compounding that into future trades I see how you can easily double or treble the account in a couple of months or so. I have not looked at conventional trading this week but note a few people saying it was quite erratic,

 

Now to get into the EJV. This week has been kind of a re-orientation week to look at the markets a little differently. I scarcely traded the previous week, have just had shoulder surgery, maybe the result of having been a marathon and white water kayaker, and had a few headaches so really only traded this week just gone.

 

I have also been running Mediators co-integration EA which is nearly there after several re-codings this week. Next week it should do well - I hope. One guy traded way over leveraged, he is supposed to be running 0.01 lots but :-

 

----- Friday a.m. Started an account yesterday $10,000 at 0.10 and left it running, wife managed to turn the platform off last night....! on loading up this morning the account stands at $14120 equity $16579 ... will leave it as is just to see where this is going to go.

 

pm us EST Equity now $20049 dd $810 ----------

 

I'll let you know when this is stable or you can look at stevehopwoodforex.com • View topic - Co-Integration System

 

I suspect I gave you that before. OK, off to get my head around calibrating the EJV.

 

Oh, how are you going with your own EA. If that replicates manual trading it should be a super beast - and I'd love a copy. :-)

 

If I can keep getting that profit I will likely be moving to somewhere North of Phuket. :-)

Best regards,

Michael.

[AltosTrader 10]

Actually Eric, this is very much what I have been looking for. My problem has always been that my day in Australia is the Asian session and it is so often lacking in follow through. I was begining to lean into pre-set breakout trading and probably will continue with that to some degree but what I have been able to do with the stoch. hybrid is select my trades around 0900 hrs AU EST and set a "Close all at Equity" EA which closes in my very early am whilst asleep. Maybe mid US session.

 

I did at one time trade the first few hours of London but that meant begining my day around 1800 and that was very much against my preferences. For 50 years I have been FINISHING work at that time and it was just too un-natural to be STARTING at that time. I had no drive to persevere with that.

 

This approach is perfect. Manually I open trades early in the day, add to them if they are further de-coupling, with prudence, and let the EA close them while I sleep. I have time in the day to geustimate the likely profit level and adjust it in the EA. I probably leave a little on the table but thus far have been reasonably accurate with my preset TP.

 

If I can maintain around the 10% profit / week I double in only a couple of months and treble, as you well know, in about 3 months. Now all I have to do is ensure that taxation does not rob me of ANYTHING in order to keep the compounding up at maximum.

 

I worked out at one time that, I think, it took about 10 years, paying tax on profits, to equal about 2 years without tax. For me, I have, legally, no tax payable if residing in Thailand. And I can bury that further by using a company structure to isolate me completely from earnings and profit. Nice !

[Eric Johnson 10]

Wow, encouraging results for the stochastic indicator, it is a surprise that it works well. I had tweaked the stochastic lines to mirror price charts, normally you would want two extreme stochastic readings in opposite direction pairs. The idea being to trend reversal opportunities. That indicator with my defaults, gives you one high stochastic reading for one pair, and one low for the other. It was only a radar for me. The original developer had very different defaults if you want to check out their model on FF.

I re-calibrated and added to the 5 minute charts of EJV so I will try to finish them and post them soon, it was a lengthy endeavor, and they look more like hourly charts now. They are the same programming, just more conservatively tuned to market volatility.

You may also notice that I am trading some not- really correlated pairs, with a zoomed out perspective on my EJV. If the ranges are reasonably defined, I am trading the pairs.

I have similar high gain results trading, I cannot over emphasize very small lot sizes, for large pip runs. News can be extreme and the markets have been kind of level. I mean that as I look at the overlap hourly charts, very few pairs have had stretched trend runs.

Well I can see that your encouraging progress is keeping people interested in this topic. It is forex orientated, but forex rules and it is good to encourage people to consider it.

Edited December 12, 2011 by Eric Johnson

[AltosTrader 10]

Whew ! Had a heavy night last night with visitors from China. Carefully sampled about 10 different Scotch's so feeling a bit dreary today.

 

I am actually being quite aggressive with lot sizing but I feel with at least 50% or more greater certainty of winning than being on a single pair trade that I can afford to be. On demo of course at the moment - just as well as I made a couple of bad order placements, but now have it all worked out on MT4.

 

When I have the EJV all fully sussed out and established a demo track record I will take it live. If you looked at the EA at Steve Hopwoods, it is not running today. Mediator has got something wrong.

 

Yes, am familiar with the FF indi's - have them all here on another platform but in light of your settings and discourse I am sticking with your settings. They are more intuitive I find but I could easily work the FF way. I have been meaning to check the "Pips difference indi but have not got to it.

 

I really am very pleased and thankful for this Eric. This approach makes it much more viable to be trading than waiting for London at night.

Best regards,

Michael.

[AltosTrader 10]

This may interest some who are tending to correlation - I don't know anything about it but will be attending myself - just to see.

 

https://sharptrade.infusionsoft.com/go/fxarb-webreg/13953

 

Jason's going to break down arb trading in detail

and show you how to do it.

 

You're going to love this because arb trading is an

easy to understand, push button simple way to pull

pips out of the markets.

 

Enjoy!

 

The Mt4Stats & Mt4Spreads Team

[AltosTrader 10]

Hi Eric. Well I got my account balance up 20 % in 7 days trading but it seems my EA could not close fast enough overnight, to take me right out and I am sitting now with a 13% DD.

 

I am quite happy about that because it will help the learning curve to now trade out of the loss, unless the market swings back on the DD pairs and does it for me. It appears to me to be the whole market has swung a bit because my EA account is in a similar situation.

 

Are you perceiving a de-coupling in the market ? Is this typical ? The hybrid has predominately low values this morning - looks like a market imbalance at present but will wait and see. Fascinating stuff.

 

AltosT

[Eric Johnson 10]

Sounds like you have been busy in all areas of life. Glad to see that your endurance and plans to live a full free life are motivating real action.

Well as you may see, especially on the hourly charts where the trades can take weeks; the name of the game is to be able to endure the drawdown. If you can, the high probability of a contraction to profit is extremely high. It is like telling regular trend riders, if you just hold positions, they will return to profitability over 90% of the time. When people realize that is what this style of correlation trading is about, it will be a new day for many.

 

I have been slow to use the Metatrader EA's with Oanda. They have this goofy order format, where the stop orders have to go in as order modifications, not with the original order. Even with the coding working properly, the order modifications do not always enter properly. I am mostly working on scalping complex candlesticks. Companies like Forex. com let you run your EA on their server, that is where I am looking to get to. For now I converted my EA's to indicators and am manually trading them, so I can watch the overall market (and 20 other pairs).

Also speaking of MT, I have run the new Jason Fielder Arb platform. It is a good idea, but here are my challenges. I live half way around the world from my broker, so latency is a concern. More importantly if I open MT and watch the market watch window, I notice that the MT feed is much choppier than my normal trade ticker. Many of those arb chances are due to lousy MT feed quality. Add to that the lousy, slow order execution on my Oanda MT, I would be losing to the spread most of the time. As for the Sunday morning market openings of brokers having arb opportunities, the spreads are absurd at that hour. I have not been impressed by Jasons correlation trading methods that I have reviewed. The arb idea is not new, just available to normal traders. If it was real hot, it would be an automated EA to grab auto profits. Maybe I will post some of his free correlation methods if I can find them, so others can see what they think.

 

I attached a profile that is not FXF based for the major pairs, this goes with the non FXF indicators I previously posted. This is the same as the screen shot. Each color is a different pair, example USDCHF is blue.

 

As for the market conditions, I really like to use the hourly overlay charts as on over view. Take a look at the attachment photo. It shows with the red arrows the market contractions. Be very cautious placing hedge trades when the market is contracted. Also form these hourly based line charts you can see the stretched long trends. If the pairs are not stretched, be cautious. The EJV will show a different perspective, but you will not see the fast there expansions either, unless the trends are strong and extended . You need these fast expansions to insure reversals. Just because a range is wide, wait for the quick dramatic expansion.

 

It has been at great few weeks for me,up nearly 18% if I can close out my existing trades at break even or better. The pairs have allowed me to switch them when I can lock in profit on one side of the pair. I look for another correlated pair that still is stretched, to couple with the negative loss side of the original trade.

Below is a list of the compared pairs that I have included and tuned on the EJV hourly profiles posted earlier. These are FXF forex. com based. I recommend running them on their native demo account, so you do not have to redo the tuning. I am redoing the 5 minute charts, just between other things. I posted one of the 3 profiles below that I finished. It is good to look back 20, 000 bars for the 5 minute charts. Scale until the high and low of the historical, extends the width of the lower window.

Off on another island adventure, no need to take my computer, generally I check the the charts every few hours, no worries. Usually the longer I wait, the better the profit. Actually I am headed to northern Phuket today, Laguna resorts are nice this time of the year. Let me know if you are visiting anytime. I have a paraglider and the surf is good in the summer.

 

AUDCAD AUDUSD

AUDCAD NZDUSD

AUDCAD NZDJPY

AUDCAD EURCAD

 

AUDJPY NZDJPY

 

AUDUSD NZDUSD

 

AUDNZD EURUSD

AUDNZD CADJPY

AUDNZD CHFJPY

AUDNZD EURAU

 

CadJPY USDCHF

 

EURAUD GBPAUD

EURAUD GBPCAD

EURAUD USDCAD

EURAUD AUDCAD

EURAUD EURCAD

EURAUD GBPUSD

EURAUD CADJPy

 

EURCAD EURAUD

EURCAD GBPCAD

EURCAD GBPUSD

 

EURCHF GBPUSD

EURCHF USDCHF

EURCHF GBPJPY

EURCHF GBPCAD

EURCHF EURCHF

 

EURGBP CHFJPY

EURGBP EURUSD

EURGBP GBPUSD

EURGBP AUDNZD

EURGBP GBPCAD

EURGBP EURCAD

 

EURUSD GBPUSD

EURUSD NZDJPY

EURUSD NZDUSD

 

GBPCAD GBPAUD

GBPCAD USDCAD

 

GBPCHF USDCHF

GBPCHF EURCHF

GBPCHF EURAUD

GBPCHF AUDJPY

GBPCHF GBPJPY

 

GBPJPY AUDJPY

GBPJPY GBPUSD

 

GBPUSD NZDJPY

GBPUSD USDCAD

GBPUSD gbp usd

GBPUSD USDCHF

GBPUSD AUDCAD

 

NZDJPY NZDUSD

NZDJPY AUDJPY

NZDJPY GBPJPY

NZDJPY AUDCAD

NZDJPY EURUSD

NZDJPY GBPUSD

 

NZDUSD AUDUSD

NZDUSD USDCAD

 

NZDUSD EURCHF

NZDUSD AUDCAD

 

USDJPY CADJPY

USDJPY GBPUSD

USDJPY GBPJPY

USDJPY NZDUSD

USDJPY AUDCAD

USDJPY AUDJPY

USDJPY NZDUSD

USDJPY USDCHF

 

USDCHF GBPAUD

-----------------

new

aud cad eur usd

 

eurcad er chf

eurchf chf jpy

euraud usd chf

euraud usd jpy

nzd jpy usd chf

eur usd usd chf

EJV 5 minute random pairs part 2.zip

INDIVIDUAL Correlations and mega.zip

Edited December 15, 2011 by Eric Johnson

[AltosTrader 10]

Hah ! Half your luck mate. Island hopping. I spoke several times to an American who runs a kayak tour business in Phuket. At that time I was thinking of divorcing and moving to Thailand, buy a kayak and have a laid back life. Even if I didn't trade I could live a long time there but trading I think would eventually creep in. Have held off on divorcing, half changed my mind as my wife really is outstandingly great in so many ways. 25 years younger, Chinese and full of energy. Unlike most Asians she is quite sports minded and was a very good white water kayaker. We have not been active in that for a few years but I have just had shoulder surgery and depending how Gym goes may get back to it.

 

What nationality or ethnicity are you ? I am a Scott, Moved to NZ for 30 years and now 31 years in Australia. I am curious about you spending much time in LOS.

 

I watched Jasons presentation also - was a little tempted but figured the broker (criminal) is going to stop these short term grabs and whilst an OK idea the arb won't work. I used to trade the news profitably with some software from "Felix" at forexpeacearmy.com. Worked very well for a few weeks and then requotes and server busy and server hangs etc etc etc.

 

Mediator currently has his EA working near successfully but with currently nearly 2000 trades placed this week for small gaines on a 100k account, I doubt any criminal would allow it on their platform.

 

What is your leverage/margin requirement at Oanda ? I will only trade with 400 or 500:1 to cope with DD and keep the margin small. I should never, ever, get a margin call. Currently I am sitting at about + 25 % on starting Balance and DD is slowly creeping down, only at ~18% now and margin DD only ~9% I could have popped a direct hedge in but was more interested to watch it work itself out without. Eur has caused the most DD of course.

 

I was foolishly ? not watching the market when the bottom fell out of the EUR. Concentrating on the corr. concept. I see now I have to monitor and keep in the market conventionally and add the corr. approach over and above. It will likely make the most gains, mainly because of my time frame but I am looking at implementing an EOD strategy to overcome this drawback. ie. little follow thru on Asian time.

 

The FXF suffix poses no problem for me so please don't do any extra work in that regard. I simply use a utility that searches through the files and strips or adds any characters I wish. This will work in batch mode so it takes about five seconds to accomplish.

 

Actually DD has been down to 14 % whist typing this - will wander about for a while but is better than the 22 % I had last night. Love the correlation, very high odds of coming back and going into profit without touching it. I am still adding trades when they present and look OK and as you say, taking profits off. All a bit intuitive at present but working well, I think and, big room for improvement.

 

This appears to me an easy proposition to code. I never learned MQL but was quite good in Basic in the early 80's when most did not know what a PC was. As a design engineer I quickly realised it was much easier to take the time and write software for my calculations than to do them manually all the time. Accuracy was guaranteed and time dropped from hours to seconds. I was going to learn Modula and C+ at one time but ran into business merger problems and never got back to it. Pity because I love the thrill of seeing something I have created do its work in a flash. Mathematics are fascinating. My 34 year old son has just finished a masters in a high maths discipline , the name of which I can't remember but is the eighth most difficult in the world, so I believe. It is applied to finance as he is looking at being a fund manager or similar.

 

Sincere thanks for the extra templates, I will have a look and work through them.

 

This should show you my progress : http://www.myfxbook.com/members/AltosT/manual-correlation/204260/RIa5dybluhyIxhJcOcB9

 

Hope you enjoyed your time at Laguna. Try kayaking :-)

Regards

Michael.

Edited December 16, 2011 by AltosTrader

[Eric Johnson 10]

Hello, I sure like that FX book charting and display you showed, nothing like a steady rising profit graph to tell the tale of success.

A few technical details before I chat. I have been so busy with my trading email box, keeping up with new ideas and integrating them into my trading. This weekend it was learning about Oanda's box trade binary options. I read a bunch on them and need to see how the real time pricing is for them. They are interesting to combine with my other recent post, on RSI, ADX, scalping methods. What interested me most is the no touch boxes. I can tell quite well the area where price is not going to go. Then I am in the position of a time expiring binary option. It is like selling uncovered out of the money options and watching the clock tick to profits.

 

There are other aspects I like, I have limited risk, no stop losses needed, 24 hour access, no slippage for announcements, and mostly I just need one touch to get paid my total. I do not need the option to go deep in the money. People complained about only Oanda buying them back, but some other binary options are all or nothing, so I have choices to hedge with the underlying currency if i like. Also I can enter into opposing positions and multiple positions. It is very interesting, and I want to come up with a strategy for correlation hedging. Something like, if I am in an expansion trade, and I expect volatility or possible more expansion I can use these boxes to offset the further expansion losses. I am able to hold the original positions without reopening and closing them, and stay in the positions for moves in my favor.

 

I attached another 5 minute profile to be used with my original FXF indicators. It is important with all of the EJV charts to backfill at least 30,000 bars and check the scaling for yourself, and get perspective on how the pairs move, rise over run, before contracting.

I am still hesitant to trade 5 mins with the wild swings happening. The best pairs to trade are the ones that look fairly flat on the hourly EJV charts. This means that the correlation is very strong, and range changes are rare.

 

Well for the enjoyable part of being a trade, meeting the people behind the efforts. I lived many years on the Big Island of Hawaii, and ocean kyacked and kyack surfed. I would spend weeks on the Waipio coast. Beautiful photos online of the Kohala coast. I am forty and got freed up for the last 8 years, via my real estate ventures. I realized that the markets were a far cleaner way to make money work, so have many hours a day to sit by the beach and do design work. I trade, but it is just to test strategies. I am into MT programming, so I do not have to trade, it bores me to death to wait all day to do the obvious trades. This is why I like correlation trades, generally the more I ignore my open positions, the more I profit.

Oanda in the USA is only 50 to 1 leverage. I do not believe in tying up money, but I use such a small part of my available leverage correlation trading.

For example the Eur/Usd at $1 a pip; it is $300 if I am looking at 300 pip runs. This is only on one leg of my trade. The margin used for the Eur/Usd is just $260. Yes more leverage is great, but you can do plenty with an account less than $10k. We have 1000 to one leverage here in Asia, MT compatible.

Cambodia and Laos are nice, and much easier on the visas. Thailand is an easy to read menu, the other countries are enchanting, but you have to hang around in the slow lane to figure out what is happening. Well it is interesting that we have so many common interests. Something about the promised land of freedom, and correlation trading work together well for me.

EJV 5 minute random pairs part 1.zip

[Eric Johnson 10]

Well, finally got these 5 minute EJV correlation comparisons retuned, they are missing the 5 or so new pairs that I listed (they are on the hourly EJV charts). I included the 2 older portfolios that I posted earlier, I again retuned some of them for my larger resolution screen. The pt 1 and 2 are tuned to 15,000 bars, most of the stacks to 30k bars historical 5 minute.

 

Once set up and tuned it is a fairly quick scan to look for fast expansions. These are forex.com Metatrader portfolios (FXF) . Good luck, the gains have been solid. High volatility is great for trading especially the 1 hour EJV charts. It is built for 400 pip runs like the Euro has been trending.

EJV 5 minute stacks.zip

EJV 5 min random pt 1pairs.zip

EJV 5 minutes pt 2 pairs.zip

[AltosTrader 10]

Well, finally got these 5 minute EJV correlation comparisons retuned, they are missing the 5 or so new pairs that I listed (they are on the hourly EJV charts). I included the 2 older portfolios that I posted earlier, I again retuned some of them for my larger resolution screen. The pt 1 and 2 are tuned to 15,000 bars, most of the stacks to 30k bars historical 5 minute.

 

Once set up and tuned it is a fairly quick scan to look for fast expansions. These are forex.com Metatrader portfolios (FXF) . Good luck, the gains have been solid. High volatility is great for trading especially the 1 hour EJV charts. It is built for 400 pip runs like the Euro has been trending.

 

Wow! Thanks Eric. My demo at MyFXBook you can see is quite heavy in DD despite it seems to show I have recovered. I am down about 2800 at present. Not quite sure how to handle this. On one hand I am inclined just to let it work itself out over time - especially because of time of year, on the other I can just continue to take signals as they come up but, I am still using the 5 min. Hybrid Stoch for this and am wondering if calibration has drifted. Yesterday I started setting up an EJV platform but other things got in my way so little progress. These re-tuned charts will be interesting to compare with Stoch indications.

 

Great to hear you have experience in kayaking. I never tried wind surfing - or even normal surfing. Except for one occasion I tried a white water boat in the surf but I could not turn it on the face of a wave as I guess the edges , or chines, were too soft. I had two tonnes of force on my paddle (felt like it) and still could not get it to carve back. Oh - yes, I did try a surf kayak once, maybe 100 years ago. That was more like a sit in surf board with very hard edges and that could turn OK. So it is horses for courses.

Regards,

AltosT

[AltosTrader 10]

Hi Eric - Having a bit of trouble following the sequencing of your profiles so, in the interests of my own sense of orderliness and understanding etc. I am, over the holiday break (for others) going to build a new platform with just one Profile for 5 min Hybrid, one for 60 min Hybrid and same for EJV.

 

I haven't at this time come to an understanding of why you have the 2 MA on the charts but I figure in building all my own profiles I will better understand what you have done and why you have "Random" charts.

 

I will rather lazily try to trade out of my current DD and just see what happens. The EC has skewed the market at the 5 minute level it seems and the effect is right across the board. I notice you have another forum on here so will have a decent look at that in due course.

 

I also have quite a few indicators from Dreamliners forum and will examine how they relate to what you have here. Gotta get profitable to get free. :-)

[Eric Johnson 10]

Yes, I built those profiles in a progression, as I needed to check up on a cross I added them. Also the MT platform can only run so many stacked charts on a page/ profile. The 2 MA charts are the line overlay charts. I left a window there for them to be added for comparison, I do not use them much, they distort, but I can see if one pair is the one stretched, and expect it to have more reversal potential. It takes hours to retune the EJV charts, so copying my settings somehow will save time.

These EJV charts/ profiles I flip through in 5 minutes, just looking for fast expansions. It is quick when you are set up. When you see an good expansion, double click on the EJV to look at the settings window. Look back historically 20k bars if you want to look for the expansion reversal scale (use page up or down key). Then if the histogram is up above zero, sell the first currency listed; buy the second. Opposite if the histogram is negative. Always put the more expensive currency in the first position. It is a quick 10 minute process to scan and make orders. The hourly EJV moves so slow it is not much maintenance.

 

You can see on the 5 minute charts historically how pairs do change range. You can see the pairs that do not change range often on the EJV hourly via the flat histogram pair comparisons. The order of the stochastic profile is based on the hourly line overlay chart mega profiles FXF. They were divided into correlating line groups.

 

For the overall market and DD, the hourly line overlay shows that few pairs have had long stretch trends. Also on most of the charts there are large formations, and the EUR/GBP daily has a mega triangle formation. I am cautious in my sizing, there is plenty of room for expansion. Mostly my positions are long EUR/USD opposing short AUD CAD and smaller NZD/USD short. I have a bunch of smaller positions that put money in my account every few days also.

 

Also if you want to share that FXF patch you use, people may have use for that. There is a script somewhere I could put into every program to unify the symbols, as some platforms use m in the symbols.

So for all of the set up and learning, this is the easiest and least maintenance system I have ever traded. It takes me outside of being chained to the tedious charts, and the short term chop. I have gotten into the box trades, they are interesting, but limited.

 

Well back to prime time in the islands. My life here is so fun that I get the motivation to grind through charts. It is hardly the highlight of my day, just my absorbing past time. The profits are a plus.

[AltosTrader 10]

 

Also if you want to share that FXF patch you use, people may have use for that. There is a script somewhere I could put into every program to unify the symbols, as some platforms use m in the symbols.

 

 

Hi Eric - It is not a patch as such. It is Pilot Edit Lite v5 and is available free at About PilotEdit. There is a fuller version for a small cost but lite does everything I need at present. Strips out the FXF and could replace that with any other suffix. There are some limitations but it handles this above with ease in seconds as it will run a major size batch and once you know how to drive it - which is not difficult.

 

Hah, yes. I figured you might have put the EJV profiles together on an as needed basis. No problem, I will build a complete orderly set although I take your comment on most action being on just a few.

 

Regards,

AltosT

Edited December 20, 2011 by AltosTrader

[AltosTrader 10]

Merry Xmas to all - if you subscribe to that kinda thing.

 

I am out of circulation for a few days at Jupiters Casino on the Australian Gold Coast.

 

Nice place but I'd sooner be white water kayaking. This is a concession to my dear wife.

Cheers.

 

PS. My Robot will continue trading till weeks end. :-)

[AltosTrader 10]

Hi Eric - Phew ! 1 1/2 bottles of Pinot Grigio later I am trying to focus on the best approach to calibrating the JM. There are a few conceptual problems with this. For instance, The EU has seen some comparatively major swings as in chart post 1. If we choose to calibrate as in the "averaging" red trendline, this gives us a different view than if we chose to calibrate on the upper horizontal white line. An alternative would be to calibrate from about April 14 2010 where the two approaches intersect. I cannot clear either in my limited intellect.

 

Aside from this, I wish you a very happy and prosperous 2012 CE.

 

Do you like the Buddhist feeling of LOS ? Me ? I am an eclectic student of Buddhism, Hindu and Tao so am very comfortable in LOS.

 

Anyway :- Have you seen my DD ? :-) Wow, 52% profit in about 20 days and now currently nearly 10k DD, Glad I have 500:1 :-) This was a bit of a mechanical exercise for me, just trade through it. No great intellect applied. Starting tomorrow, Jan 01, 2012. Didn't someone say the end of the world in 2012 ? More serious tomorrow.

 

Attached also are a couple of utilities you may find of interest. The Overlay is the best I have seen, provides the price level on left of screen. It will display to the extent of history you are showing on screen. Nice. All self explanatory.

 

The EA Resizer is excellent, no more scrolling back to see what you input - details at Steve Hopwoods if needed, activate on any chart and re-size EA input box by dragging edge - on any other or same chart, and the #sok is a nice display of majors correlation. They are all mq4 so you can get inside and modify to your hearts content.

 

The final jpg is my current screen. I am struggling to understand the advantage of the JR here. I have tried calibrating it to the open of the previous week and I have tried back to April 15. 2010. but cannot get a satisfactory display. Maybe this is because there is insufficient volatility in those pairs but it is late now and I am heading to bed. Gotta get the beauty sleep. Will persevere tomorrow on more volatile pairs.

Cheers,

AltosT.

#sok_v6-7_Correlation of Majors.mq4

InputResizerEA.mq4

-OverLayChartLINE.mq4

Edited December 31, 2011 by AltosTrader

[Eric Johnson 10]

Hi, looks like you have been hard at work, as have I. It is high season here and I prefer to work some, to avoid the masses. To find fun and festivity is easy, it is always available here.

 

Ok for the EJV, the idea of previous week open was something that I put in the fine print of one of the previous posts. That idea was a left over in the programming. Actually that was an auto sampling of price that I froze. It is now an input of the "center of historical action" of your historical sampling. It is just and adjustment used to center your graphs. I usually sample 12 - 20 thousand bars. The focus is not so much on range, but rate of vertical change to trade.

 

The historical vertical scaling is somewhat important for zoom perspective, but really you are looking for fast dramatic expansions. Even if you think you are at an historical expansion level, if it is not proceeded by a fast expansion, it is not my kind of set up. Take a look at the attachment. The white line shows a good vertical change, even if the reversal low was not at historical levels (orange arrow). Compare this with the orange line, good levels poor expansion, poor trade, drawdown before profit.

 

As for you demo drawdown , I do not trade that stoc system, but here are my thoughts. Forgive me, kind of the same mantra, but I repeat it for any new people. The object of the trade is to survive the drawdowns, because the payoff and probability is so high. The long extended trend runs of the Euro can take months to retrace, or pull the correlate pairs back into place/ profit. Small lot sizes scaled in, long pip runs.

 

The EJV purpose is to freeze in settings, to stop distortions in overlay scaling, or things like stocastic peak flattening. It is real pips, real profit or loss, true expansions.

 

I look forward to the new tools you posted, I appreciate you keeping up with the developments, I have so much going on here with my 20 other trading systems I have running all at once. I got more monitors and upgraded everything for the new year. It is hard to look back on my charts and see how many perfect trades I missed, due to just not monitoring my alerts. I actually have a real life, and when I work a few hours, I want to be busy making profits on short term charts, not waiting around for ideal set ups.

Anyhow best of clarity to you..