Elite Trader's Gambler's Anonymous ETGA

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How about what I suggested earlier? When the point at which the pool starts to widen put 10 pip scales in-instead of pivot's...This would be to trade Support and Resistance...Forget the directional forecast, let the market tell you. If your wrong, so what?

For example...

If you look at that earlier screenshot you can see the pool width. Lets say the EUR/USD goes down to the bottom of the pool at the pivot 1.2762..then put on about 10 or 20 limit orders 10 pips apart with 10 pip limits, on the other side at the top of the pool in the USD/CHF at whatever level it is at during the breach (probably around the 1.2023 pivot and above area)...So if the EUR/USD breaks down hard then we enter and exit a lot of orders with a lot of profit. Vice Versa if the EUR/USD goes up.

Lets say were wrong? What do we lose? Nothing! The EUR/USD retraces and the USD/CHF comes back down with a band of extra orders at the top...(we could use half-trade size)

Michael B.

P.S. I think at the breach of the pool, the trading will get real volatile...We have been in this 714 pip pool now for a month without much widening...

P.S.S. There are many mini-support and resistances within the pool too..(look at the pivot 1.3119 in the EUR/USD that would give us some "one-sided 10 pipper's" in the USD/CHF at around 1.1753 pivot and lower or where-ever they happen to be at the EUR/USD breach). Hey guess what? Discretionary trading does not need to be gambling either!
Quote from mogul:

I think you can use some concepts from this into trading with a directional bias

Based on broad fundamental understandings of the currencies we are trading, hit your directional bias harder

Eg. if you are bullish on Eur\Usd on a 5-10 year span, buy into both the strengths and the weaknesses, and possibly trade around you position by routinely selling on retracements

If you figure your max uncle point of the downward range, your still safe while you average down your price on an expected eventual rise

I personally don't see any strengthening of the USD in the foreseaable future, so wouldn't it be more rewarding to stick to your guns that way?

That is how you clean up if you are right...
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I understand that you chose EUR/USD & USD/CHF because the movements are not highly correlated.

But do you realize that by being long EUR/USD & short USD/CHF you are actually short USD in both trades?

The movements may be statistically un-correlated but I don't think these positions hedge each other. You're simply borrowing USD to buy EUR & CHF.
 
No I do not understand...How do I calculate this? Where do I get the information?


Quote from futures_shark:

I understand that you chose EUR/USD & USD/CHF because the movements are not highly correlated.

But do you realize that by being long EUR/USD & short USD/CHF you are actually short USD in both trades?

The movements may be statistically un-correlated but I don't think these positions hedge each other. You're simply borrowing USD to buy EUR & CHF.
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If you put on the trades using IB's demo TWS and view the account balances it will be apparent. They actually show the currency balances in the account info window.

Whenever you buy a currency pair you are buying the first currency with a loan in the second currency.

So if you buy 1000 EUR/USD for 1.2900 you effectively have two positions:

+1000 EUR (earning interest)
-1290 USD (costing interest)

If you sell 1000 USD/CHF @ 1.195 you have the following:

- 1000 USD (costing interest)
+ 1195 CHF (earning interest)

Think about it like you were on vacation and changing actual money.
 
So I'm flat USD?


Quote from futures_shark:

If you put on the trades using IB's demo TWS and view the account balances it will be apparent. They actually show the currency balances in the account info window.

Whenever you buy a currency pair you are buying the first currency with a loan in the second currency.

So if you buy 1000 EUR/USD for 1.2900 you effectively have two positions:

+1000 EUR (earning interest)
-1290 USD (costing interest)

If you sell 1000 USD/CHF @ 1.195 you have the following:

- 1000 USD (costing interest)
+ 1195 CHF (earning interest)

Think about it like you were on vacation and changing actual money.
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no you are SHORT USD if you Buy EUR/USD & Sell USD/CHF

Put the above two examples together and you have a negative USD balance (short) of 2290 and positive balances (long) 1000 EUR & 1195 CHF.

The correlation matrix that you posted a link to earlier shows a result of -95 between the pairs. This means they move almost perfectly in sync in opposite directions. So If you buy or sell both then you are flat USD and just trading EUR/CHF.

a perfectly un-correllated pair would have a result of 0. as the absolute value of the result approaches 1 you move towards perfect correlation.
 
So if I used a slightly higher trade ticket on the USD/CHF could I find balance? How much?...

or...

Should I just accept the fact that I need an inverse position in a subaccount? Like going short the EUR/USD at the same time I am long?

Michael B.

 
There is no balance to be found. these two pairs move together but in opposite directions because of the way they are quoted.

EUR/USD = dollars per euro
USD/CHF = CHF per dollar

If you buy one and sell the other both positions will gain/lose the same based on what the dollar does.
 
In the exposure tab of Oanda (in units):

Short CHF 22,043.92
Long EUR 14,875
Short USD 1,342.78

But instead of using the USD/CHF, Perhaps it would be better to have used the EUR/USD itself.

Michael B.

P.S. So to correct this I could put on two more pairs (short EUR/USD and LONG USD/CHF)
 
That looks like you are long both EUR/USD & USD/CHF.

Being long both pairs is the same as being long EUR/CHF

Quote from ElectricSavant:

In the exposure tab of Oanda (in units):

Short CHF 22,043.92
Long EUR 14,875
Short USD 1,342.78

But instead of using the USD/CHF, Perhaps it would be better to have used the EUR/USD itself.

Michael B.
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