How do you use correlations?
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Thread: How do you use correlations?

  1. #1
    Hi guys,
    when you've got a lengthy sign on two pairs along with the correlation is 0.99 you input on one of theme,otherwise you double you place. If the correlation is -0.99 you select one position also, otherwise the rankings equal zero. What if the correlation is around 0.95? After the correlation is too powerful and you have to select one of the rankings?

    Candos

  2. #2
    I really don't use correlations (HeckI do not even feel that you can trade them ), but I feel that the idea in trading correlations is to gain from the interest rate difference that is paid out daily. So on your cases, you'd wish to have position on both because then you can profit off of the interest rate difference.

    Complied topic, I'd be amazed to see if anyone was really consistently profitably.

    Hope that helps,

  3. #3
    Quote Originally Posted by ;
    Hi guys,
    if you have a lengthy signal on two pairs along with the significance is 0.99 you input on one of theme,otherwise you double you rank. If the significance is -0.99 you choose 1 position also, otherwise the rankings equal zero. What if the significance is about 0.95? When the correlation is too strong and you need to choose one of the rankings?

    Candos
    Here are some generally accpeted statistical guidelines where r represents the amount of significance. Note that the exact same would apply to unwanted correlations.

    R ranging from zero to about .20 could possibly be regarded as indiing no or negligible correlation.
    R ranging from roughly .20 to .40 could possibly be regarded as indiing a low degree of significance.
    R ranging from roughly .40 to .60 could possibly be regarded as indiing a moderate amount of significance.
    R ranging from roughly .60 to .80 could possibly be regarded as indiing a marked degree of significance.
    R ranging from roughly .80 to 1.00 may be regarded as indiing high-definition

    It's up to you to choose how much significance is a lot.

  4. #4
    thanks. . I think that utilizing correlations isn't esasy for a newbie so I'll select pairs That Aren't connected

    Canados

  5. #5
    Phil Said
    Listed below are some generally accpeted statistical guidelines where r represents the degree of significance. Note that the same would apply to unwanted correlations.

    R ranging from zero to about .20 may be considered indiing no or negligible correlation.
    R ranging from roughly .20 to .40 may be considered indiing a low degree of significance.
    R ranging from roughly .40 to .60 may be considered indiing a moderate degree of significance.
    R ranging from roughly .60 to .80 may be considered indiing a marked degree of significance.
    R ranging from roughly .80 to 1.00 may be considered indiing high correlation


    Canados Replied
    thanks. . I think that using correlations isn't esasy for a newbie so I'll select pairs which are not correlated

    ************
    Candos, Your exactly right in stating that. However, whomever told me Trading Fx was easy, was probably a Brkr or someone seeking to place others in the same pit of despair he currently occupies.

    During Low Volatility intervals, think about this...Trade High Volatility should you have the Pills for it

    Extended 10 Mini Lots of My Favourite Pair.
    Brief 5 Mini Lots of r ranging from roughly .80 to 1.00 may be considered indiing high significance.

    With appropriate control rules in place, Exit the weaker commerce.

    I can hear it today. Why wouldn't I just proceed Extended 5 Mini Lots of My Favourite Pair?
    Because in case you do and it turns out sour, are you more likely to disperse an opposite trade with an additional Spread expense, or feel good about already being in the Other Trade?

  6. #6
    I didn't mean that trading Foreign Exchange is easy but I meant that's better follow a system on many pairs minus the compliion such as correlations. Actually, I'm testing a system but now there was different signals on correlated pairs.I was confused so since today I will choose no correlated pairs

  7. #7
    There are very few reasons to hedge in Forex. The sole legitimate one I can think of is that a carry trade where you are working to capture the interest rate differential between two pairs. That's great if you have 6 weeks and are happy with a pip a day. And of course that you still take on some directional risk while doing this.

    If you wish to trade Forex, decide on a pair, get a platform and exchange it. Don't trade related pairs in opposite directions. That's plain retarded. Grow a spine, pick a direction and go with it. If you're incorrect, stop outside or reverse course. Trading related pairs at the opposite directions just benefits your broker since you've paid double the spread and locked yourself out of any profit.

  8. #8
    Quote Originally Posted by ;
    There are not many reasons to market in Forex. The only legitimate one I can think of is that a carry trade where you are working to catch the interest rate differential between two pairs. That is great if you've got 6 weeks and are happy using a pip a day. Not to mention that you take on some directional risk while doing so.

    If you would like to trade Forex, decide on a pair, buy a system and trade it. Do not trade correlated pairs in opposite directions. That is plain retarded. Grow a backbone, pick a direction and go with it. If you're incorrect, stop outside or reverse course. Trading correlated pairs in the opposite directions only benefits your broker since you've paid double the spread and locked yourself out of any profit.
    Let me get this clear phil, are you suggesting I have no backbone for this?

  9. #9
    Nothing personal. I don't know you or your system. Most hedgers in Forex who traded affiliated pairs from each other are spineless. That was not my choice of anatomy.

  10. #10
    Quote Originally Posted by ;
    Nothing personal. I really don't understand you or your system. Most hedgers in Forex who traded correlated pairs from each other are spineless. That wasn't my initial choice of anatomy.
    Without Predjudice.
    Your sometimes right phil. You do not know me or my system.

    Perhaps because your other part of the anotomy you're thinking of are only Virtual and so you did not know how to spell it.

    You tell me you consider me spineless and then when challenged you say nothing private. Enormous Weballs buddy.

    I am sure you'll have a retort similar to those you've posted to TRO, Twoblink... and the list goes on... like Oh yeah, then place your system. I have noticed you do this a couple times. What's the problem phil? You do not have one?


    Hey Scott, Get your eraser prepared.

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