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Inverse Pairs
Apr 12, 2012 at 02:03
+1 for Midoru.
You have to think in terms of portfolio management. This style of trading is positional and swing trading typically. Stops are not used. If you are of the belief that markets are cyclical all you need is for TIME to go by.
If I have a potion(s) (long only) open in AUD/USD and the trade goes against me I look to buy USD/CAD. This does two things.
1) buys me TIME to be right on my original position.
2) reduces my risk on my original position (this is my stop)
You have to stay small with your position sizing, this is key.
Lets say I have 30% of my portfolio tied up in Oil, gold, silver and /NQ I'm long, I feel that we are in a bull market. A few days go by and it's in my face big time. What do you do? I have to look at going long the dollar to reduce my risk, buy me time to be right and collect some profit in the mean time. Yep, you are playing both sides of the market (because you believe they are cyclical) and quite frankly, you can't pick tops or bottoms so why try 😈
you are hedging your draw down learn to like it 😉
That's it in it's simplest form, nothing complicated at all.
You have to think in terms of portfolio management. This style of trading is positional and swing trading typically. Stops are not used. If you are of the belief that markets are cyclical all you need is for TIME to go by.
If I have a potion(s) (long only) open in AUD/USD and the trade goes against me I look to buy USD/CAD. This does two things.
1) buys me TIME to be right on my original position.
2) reduces my risk on my original position (this is my stop)
You have to stay small with your position sizing, this is key.
Lets say I have 30% of my portfolio tied up in Oil, gold, silver and /NQ I'm long, I feel that we are in a bull market. A few days go by and it's in my face big time. What do you do? I have to look at going long the dollar to reduce my risk, buy me time to be right and collect some profit in the mean time. Yep, you are playing both sides of the market (because you believe they are cyclical) and quite frankly, you can't pick tops or bottoms so why try 😈
you are hedging your draw down learn to like it 😉
That's it in it's simplest form, nothing complicated at all.
I just trade.
forex_trader_28881
會員從Feb 07, 2011開始
691帖子
Apr 12, 2012 at 03:45
(已編輯Apr 12, 2012 at 03:50)
If your position sizing is right those don't really matter.
News is just scheduled volatility as apposed to unscheduled volatility.
There is a maximum or minimum amount of volatility that can come into the market before world global systems will fail. Almost did in 2008. For a while couldn't get dollars in places like Singapore or Bangkok at the money changers. I tried, was traveling at the time. So that would be low volatility and on high volatility big business pick up problems and the governments move to intervene.
So that causes blips, but I've seen what 2 or 3 interventions in the last 3 years ? So 3 days in 750 trading days? Not really something to worry about then if the rest of the portfolio is well thought out.
For the most part we won't get serious volatility issues for at least 10 or 15 years or so, since we've just had our big event.
If the world systems see their arse, well, you can't really plan for that in a day-to-day trading system. So get the position sizing right and nothing really matters.
I leave my systems alone for months at a time and it makes no difference.
News is just scheduled volatility as apposed to unscheduled volatility.
There is a maximum or minimum amount of volatility that can come into the market before world global systems will fail. Almost did in 2008. For a while couldn't get dollars in places like Singapore or Bangkok at the money changers. I tried, was traveling at the time. So that would be low volatility and on high volatility big business pick up problems and the governments move to intervene.
So that causes blips, but I've seen what 2 or 3 interventions in the last 3 years ? So 3 days in 750 trading days? Not really something to worry about then if the rest of the portfolio is well thought out.
For the most part we won't get serious volatility issues for at least 10 or 15 years or so, since we've just had our big event.
If the world systems see their arse, well, you can't really plan for that in a day-to-day trading system. So get the position sizing right and nothing really matters.
I leave my systems alone for months at a time and it makes no difference.
forex_trader_73122
會員從Apr 11, 2012開始
16帖子
Apr 12, 2012 at 06:33
This inverse method is interesting. Which account can i review where this inverse method is being used? My computer is acting flaky tonight, my kids have it all jumbled around. sp
Apr 12, 2012 at 11:12
This has been very helpful.
As I develop this new investing strategy I am developing two train of thoughts. Take in mind that I am new at this strategy.
First I think of trading both pairs that have the correlation difference. Start small and add to the positions if they go against me with all belief that they will come back at some point in time.
Second, after reading PayPip's comment, I have the thought of only trading one side of the correlation difference and using the other side if the trade goes against me to stop my losses with all belief that the will come back.
I think either strategy might work. Which train of thought should I pursue?
PipGnostic and PayPip, thanks for your patience and sharing your knowledge. The both of you have helped tremendously.
As I develop this new investing strategy I am developing two train of thoughts. Take in mind that I am new at this strategy.
First I think of trading both pairs that have the correlation difference. Start small and add to the positions if they go against me with all belief that they will come back at some point in time.
Second, after reading PayPip's comment, I have the thought of only trading one side of the correlation difference and using the other side if the trade goes against me to stop my losses with all belief that the will come back.
I think either strategy might work. Which train of thought should I pursue?
PipGnostic and PayPip, thanks for your patience and sharing your knowledge. The both of you have helped tremendously.
forex_trader_73122
會員從Apr 11, 2012開始
16帖子
Apr 12, 2012 at 16:17
This trading method is very promising, we have already automated it. Thank you for yout contributions of knowledge. My uncle writes software on another program, he has it trading by itself already. The links were goldmines of information. Thank you. Gotta run, we have relatives coming into the airport. sp.
forex_trader_64453
會員從Feb 03, 2012開始
33帖子
Apr 12, 2012 at 20:17
My point of view is that ok you can make millions on balance by closing positions by hedging positions but 100 bucks on equity, the real money is the one you have when you close all your positions.. as an example.. are we really sure that if i was short just few months ago when eu was less than 1.28 it will come back to that position?.. or maybe if i had cut my loss at 1.29 y will have now more than 200 pips in my pocket.. balance is the worst ilusion we believe is true.. just an opinion.. :)
forex_trader_73122
會員從Apr 11, 2012開始
16帖子
Apr 13, 2012 at 13:34
I have received more than one request that we share my uncle's trading software, i will pass these requests on to him. He does not usually give out his work, so dont hold your breath. I understand that he is working out the kinks in the backtesting procedures, or so he says. Everything that he says sounds like greek to me, every other word out of his mouth begins with nano or mega or blip. I am constantly asking him to translate what he says into plain english. The kids have soccer games for the next few days. sp.
會員從Dec 15, 2010開始
784帖子
Jun 22, 2012 at 19:11
Im trading similar, negative correlation pairs. I have a home built EA that Im forward testing with different setups. Your welcome to click on my charts. SOMe charts have 2 pair and some charts have 6 pairs. All have different settings. Some pairs are stronger and thus I have 2 smaller strength pairs in inverse to the strong one. I have one chart setup with 3 pair.
Garry
Garry
Click on my Name to see My Live Charts and Bio.
forex_trader_77056
會員從May 10, 2012開始
71帖子
Jun 23, 2012 at 08:28
alphasys posted:
.... balance is the worst ilusion we believe is true..
This is so, so true. Just look at my signature !
forex_trader_77056
會員從May 10, 2012開始
71帖子
Jun 23, 2012 at 08:33
I just got to reading this thread, and its quite interesting. However, I think it started out as on thing, and has veered of into another. The original posting sounded like divergence trading while it looks like it has evolved to hedging of trades.
forex_trader_77056
會員從May 10, 2012開始
71帖子
Jun 23, 2012 at 08:44
PayPip posted:
You have to think in terms of portfolio management. This style of trading is positional and swing trading typically. Stops are not used. If you are of the belief that markets are cyclical all you need is for TIME to go by.
1) buys me TIME to be right on my original position.
2) reduces my risk on my original position (this is my stop)
You have to stay small with your position sizing, this is key.
TheCyclist posted:
If your position sizing is right those don't really matter.
...
I trade almost exactly like this (but I have soft stops), and yet I still get people asking me why there are months where I don't trade at all, and when I trade, how I hold positions for weeks.
I think with all the white noise and misinformation online, its hard for anyone trying to get into trading to not over leverage, over trade, or to just simply stay away from the market when its just simply unfavourable. Its sad to say, but I think a lot of it has to do with the brokers, and also IBs posing as mentors out there that encourage hi frequency, hi leverage trading.
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