Yes to Correlations - when price action on each individual market supports it. And when it makes sense.
No to Correlations - if not. (Most of the time) As none us of ever really know when change is coming. That would make us Pundits, not traders. Also, Correlation is an effect, not a cause, often comes too late to do anything actionable
Dangerous to build correlations. So why does everyone do it? Cockroach theory, because one meat-head does, so do the others. No original thinking, No curiousity. Besides its simple to say - dollar goes up, oil goes down. Its an all encompassing statement that requires not much thinking.
Works sometimes, and when it fails, then what?
Why not attempt to build an approach to work in both cases, I know its harder, more scary, And one, maybe, ends being looking like a fool more often, but my bottom line thanks me for it.
Will I succeed, of fail like the Titanic? Who knows..... success is only decided when you are on your deathbed.
Last edited by Deucalion; July 9th, 2013 at 04:42 PM.
Reason: Corrected Grammar
The following 3 users say Thank You to Deucalion for this post:
Just to be clear, I don't trade on the correlation, it is just something I watch daily and rarely see where every market is green at the same time. I spent 90% of today flat. Price opened in balance and I never saw anything that felt great. I see now, after RTH close, that crude ran up and broke the ETH high, and may make 105 before 5:15pm. It can go to 150 while the dollar goes to the same, nothing can stop either one from doing what they are going to do.
Many times when I see in the after-the-trade news where they try to justify what moved price, and they reference things like the dollar, I just laugh at it. Maybe there was a time where it worked well, and there are still times that I have seen one market wait until another reaches it's zone so they can move together, but I have overlayed many charts that were rumored to be correlated and can find enough times where they are not to not worry too much about it.
But, unless something really goes wrong in Egypt with the Suez canal, crude has some 'splainin' to do.
The following user says Thank You to GaryD for this post:
Shit Gary, I took over your thread.....but one more please, and thank you.
Also, please know it wasn't directed at you, of course. You already knew that. I just found this an appropriate time to say this. I am probably out of place as far the thread goes.
Remember this guy, @Lornz, who BM banned for being a rude so and so .......most of his posts were provocative. They were not provocative for the sake of being so. It was to prop up heretical and original thought.
If one wants to go a step further, read Winner Take All - William Gallacher. Its not about correlations, it about entertaining thoughts contrary to your own. Even if it doesn't progress one's trading, it allows, at the very least, open thought.
But, what do I know?
The following 4 users say Thank You to Deucalion for this post:
Lornz was banned because he literally asked to be banned.
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
If you want to support our community, become an Elite Member.
The following user says Thank You to Big Mike for this post:
This whole thing with oil moving higher has me very entertained. I have seen oil run over $100 three times that I remember, each time geopolitical from what I remember also.
I have gotten more and more to where I do not want to trade something I do not fully understand. And since I add so many layers to it, intentionally, there is so much going on intellectually that I am intrigued and content to just watch. I think of the buyers and what is driving them. Not the short covering that is occurring, but the main forces initiating buying. I understand it as they are buying insurance to lock in their cost of doing business, which includes hedging. A perceived threat is upon us.
What I saw today on the Vwap was they kept rejecting value, what I saw on the TPO was mostly one timeframing, tighter and tighter. And once the RTH was over the volume was light enough and there was no one about to fade that momentum, and it had no where else to go until 5:15
If WTI becomes easier to depend on, will it par Brent?