[Lucid]

As humans we do not come equipped with the ability to deal with the variety and often times confusing aspects of randomness. We are taught from a very young age to strive for perfection, for high scores in school and in sports. This could be our biggest flaw and is the handicap for a lot of traders. There is no perfection in trading and never will be. It is a profession of chance and liability. Traders must learn to put probability in their favor and realize the markets are extremely random. Most traders forecast future price using some combination of fundamentals, indicators, patterns and experience in the expectation that recent history will forecast the probable future often enough to make a profit. This is fine for those 5% of traders that actually make money, but most forget that Randomness controls the forex market and cannot be predicted.

THE CORRELATION TRADE

Fight Randomness with Randomness by using the Correlation Trade!
Statistically speaking, correlation is the measured relationship between two units over a period of time. Correlation is measured on a range of -1 (perfect negative correlation) to 1 (perfect positive correlation). A positive correlation implies that the two units move in similar directions, the higher the correlation the closer and more accurately these moves are. Conversely, a negative correlation represents opposite movements with a smaller (more negative) number representing a stronger relationship between the opposite movements.

So far our correlation strategies have brought our forex managed account great returns and I am so surprised that more people do not discuss and use this method of trading

JACE

[MidKnight]

Maybe you would like to post some examples and add some meat to 'the correlation trade' such as finding candidates, trade management, risk control and position sizing. As your post reads right now it is nothing more than an advertisement for the managed accounts you mention. Especially given that you have been a member of TL for 18 months and this post of zero information is the first post you make.....Get the discussion rolling by adding some meat.

With kind regards,
MK

[youri]

Hi Lucid.You are right 100% but lets say you have found something, A-B with corallation 1 you still have to forecast future price using some combination of fundamentals, indicators, patterns and experience in the expectation that recent history will forecast the probable future often enough to make a profit. Because A and B trading in the same time frame and what has happend with B two days ago to late to take action for A today.

[Lucid]

Yes I will start posting more and more stuff as I go but that was just the starter. I copied and pasted it from my site. Our Main Priority is trading so it will be a hit and miss. I will also post trading statement to show people how the Correlation trades really work.

[Lucid]

Yes Youri you are correct we take a look at the fundamentals every hour of every day. I am not much a believer in the whole indicator mess that everyone gets caught up in. It is all hind site and I have not seen too many traders that really make money using indicators. It is all about Price action. They best way to show how it all works is to post a few live trading videos. I am not sure if the Traders Laboratory will let me do that.d

[brownsfan019]

Originally Posted by Lucid »

Yes I will start posting more and more stuff as I go but that was just the starter. I copied and pasted it from my site. Our Main Priority is trading so it will be a hit and miss. I will also post trading statement to show people how the Correlation trades really work.

In the spirit of disclosure, are you here to promote a paid website or share ideas w/ members?

[TheDude]

So I imagine you are using a tightly correlated instrument as a leading indicator?

[Lucid]

Not sure what you are asking. No I do not have a product to sell everything on my site is free education. I trade FX Funds I thought this would be a good Idea to show people how real life funds trade and to show how are correlation works. The truth is most traders lose money and most really do not put in the time or effort it takes to become a great trader. I get weekly phone calls from people who have blown up their account and want us to come on and save them so I thought it would be a good idea to come on a forum and hopefully help a few people out. Like I said I will be able to post our set ups and trades periodically and I will try and answer any question I get regarding correlation trading in a timely manner.