Has anybody applied this strategy to currency pairs? Any success stories? Please post your experiences, good or bad. Thanks.
How it would be applied to FX might get a bit tricky, since you'd run the chance of just creating a short list of synthetic positions instead of a balanced portfolio of positions. The issue boils down to the fact that you open a position on a given spot pair, you have a long side and a short side of your position, and these can cancel out the exposure of other positions you have on: http://www.anotherforumn.com So your planning on 'rotational trading' has to be done accordingly... I can't tell you how many times I see bright traders create huge basket orders that they think are hedged or trading strength/weakness paired positions when, boiled down, they end up with a single synthetic position that would have been a lot less costly to put on with just one trade of a cross currency pair. EDIT: if I understood rotational trading correctly.. I don't trade that way myself.
yes, that's how I started out. I had a list of 21 pairs and kept 7 on at all times with equal size. But that's just to get there, it takes a lot of rotation and most of the time you are cancelled out to some degree. But when you find what's working you usually end up with just the six pairs all long or all short. I made very good money trading it, but the drawdowns can be pretty demoralizing not because of the amount but because you are constantly getting stopped out. I quit using it because I don't like using stops.
What the crap? I didn't link to another forum, it was the babypips educational site that talked about synthetic pairs...
There appears to be some misunderstanding. There are no stops in rotational trading. You simply trade the top performing pairs in your basket. For example you might trade the top 2, or you might decide not to trade a pair until it becomes the top 1, but you don't drop a pair until it falls below the top 3. So the entry and exit signals are whether or not a pair fits into your top group, whatever that is. Obviously the "secret sauce" is the ranking formula you use to decide what makes a "top" performer. I haven't been able to make this method work for me and I was hoping somebody had found a way to make it work before I just shun it altogether as another trading myth.
Mod/Admin assumed it was to another forum and altered my link.. maybe someone complained about the link and the mod didn't even bother checking.. I can't edit a post after 30 mins from posting it, so I can't even change it back.. Stuff like this kinda pisses me off, especially since I was trying to be helpful.. Oh... and I checked the user agreement of this board, and even if it did link to another forum there's no rule against doing so. Funny that.
I haven't been trading forex that long. When I asked how to do it several posters linked me to babypips.com. Didn't help me much, but I'd hardly call it a competing website. otherwise, rotational trading sounds reasonable. The way I look at it, it's just another money management strategy. Any way you cut it, nothing beats going in with a hard stop, but like I say, that can be very demoralizing, especially when you get stopped out 25 times in a row. best risk to reward is 1:infinity but I had very good luck (and I emphasize the word "luck") with a form of rotational trading due to the fact that I just happened to be on the right side of SNB and JoB. But I would not call it a crackpot strategy not worth exploring. btw, I don't use stops, but it's a luxury I pay for.
Can't say I agree on the no-stops part, but to each their own. I bet you get a lot of flack for that online as there are few styles of trading where "no stops" is safe. But in any case, happy trading
I pay for it by trading smaller size. When you think about it, even if the broker closes you out because you don't have enough to cover the margin, it really doesn't affect your bottom line that much. otherwise, when you said long AUD/JPY short AUD/USD was the same as long USD/JPY I see what you are talking about. The percentage difference is almost always the same. Didn't want you to think the help you offer goes unappreciated. Good luck to you too (oh that's right, you don't believe in luck) oh well, at least you believe in happiness. So "happy trading" (if there is such a thing) to you too.