Inter correlation analysis
This is very important to improve the success rate.
1. there are thousands of fake / lousy signals.
so inter-correlation analysis helps improve the success rate.
take for example yesterday 9 Nov 2021.
ES, NQ, Russell 2000 went down around the same time during the early part of
the US session.
When such futures are moving in tandem, the success rate tends to be better.
2. There are times when the market movement is choppy and chances of failure are high
due to whipsaw.
Eg during the US session, you want to trade ES / NQ but the market is choppy.
Look at other Inter correlated futures (eg DAX, Hangseng, CAC40 ...).
see whether DAX, Hangseng, CAC40 .... movement is more decisive / less choppy.
If it is, trade the more decisive futures.
That helps improve the success rate.
Intercorrelated futures grouping
- various index futures as mentioned above (quite common)
- index futures and commodities like copper, crude oil (quite common)
- bonds and gold (occasionally)
- index futures and major currencies (seldom because currencies like to sleep)
- copper, crude oil, gold, currencies (because of the common denominator US Dollar)
- Shanghai INE copper and US Comex copper (quite common)
- Shanghai INE crude oil and US Nymex crude oil ( quite common)
etc etc etc
The above list keeps changing. so keep yourself updated.
