heres an extract from an interesting conversation i am having with another trader at T2win - do not imagine i am disrepecting my own thread here - as it has a wealth of knowledge and advice for traders new to Forex and relative strength - so read it from day 1 if you want to learn - however if you are and expert Trader in your field as FiboTrader is ..i'm merely trying to save him some time
Dont waste your valuable time on the Big correlation thread (unless you really want to) ...someone of your talents will learn little
It grew and grew into a beast as i continued to refine certain areas and test new boundaries ......I also met many fine traders and programmers along the way and they helped me create many derivatives of the humble core FXCorrelator model (that regrettably will never be offered to the General public)
I ditched the intermarket analysis (a la Murphy and others) years ago as for me it does'nt work - like many trading systems that are claimed to work by mysterious gurus and other bullshit artists....I do not mean to sound disrespectful of his work as it was better than most of the thousands i have studied....
Sure on the face of it intermarket correlation and fuzzy logic naturally exists at a superficial level ......and moderate returns are possible when the patterns and correlations are right ......but I have found them transient and insufficient to justify extended focus and interest
in the end after hundreds of mutated experiments I am pretty simple and purist these days .....My strengthmeter and its derivatives give me an edge in spotting the best pairs to trade and then my secondary more PA / indicator based systems flag up key patterns and signals when they offer......candy from a baby as long as the market has volume and time is right
all i do these days at T2win and other forums is share some really basic ideas and concepts around relative strength and try to enthuse and encourage Forex traders to perhaps use them in their strategies
I cannot believe how dumb most forex traders are......just following 1 or 2 key pairs religiously when the G8 offers 28 pairs to trade ...... 24/7 ......3 main trading sessions a day and 5.5 days a week .....they trade just say 5-10% of the available active market and feed on scraps ......happily
more money available to me I guess and Traders like yourself where you have a phenomenal edge and are bemused and amazed that others dont see it or follow it ......about 95%+ of them in fact (again luckily for us)
I can trade a variety of ways based on what the market is telling me
1 - Continuations into trend
2 - Breakouts (either direction)
3 - Range bound S/R trading
4 - O/B and O/S - retraces
so pretty much the whole range of core stuff most traders use ........probably 35% of the time i'm on strategy 1 when i scalp as long as market is suitable .....35% on Strategy 4 , and 15% on the other 2 ........its hard to be generalist as each market / session is different ...I scalp 90% of the time as any higher timeframes are like watching paint dry and i have less control on external market News and unforseen events...and holding a trade over a weekend would put me in an early grave regardless of ATR and Stop involved .....just my own personal trading personality and character ...I like it fast and tight .... and was made for scalping
my previous post in truth is probably a little too simplistic in truth about "follow what the G8 are doing" and relative strength / weakness .......I do also follow a lot of specific patterns and behaviours of the individual G8 currency indexes and also many tribal / group patterns that give big clues to what is going to happen next .....
again pretty confidential although i let a few out on my thread over the years ....but many are not rocket science ....like Yen and USD in pattern formation both strong or weak is a great market dynamic that will offer easy money on trading the other currencies against them ....although as you are aware these collaborations can disappear much faster than the good old days of Risk on risk off ......(god i miss the easy days of the past )...sprinkle in some CHF correlation as well to spell a full risk pattern and it was easy times.....
there are many many ways to find an edge in trading ......but as in life and business - only a small % master their art and harvest the returns and profits therein ......the others merely exist to feed them as they blindly follow the next faddish system or market with zero discipline or understanding of the trading art.....