Dow Jones and Ftse

Published on Saturday February 4th, 2012 at 01:34PM by don555

I have been reading this week how the Dow jones follows the Ftse.

If this is the case how can I turn this to my advantage to enable me to create a system that can consistently make me pips.

If someone could give me favourable answers I could also follow other pairs that are closely correlated as well.

Where to actually start is the problem any help would be greatly appreciated.

  • Go to Brad's profile

    On Saturday February 4th, 2012 at 05:27PM by Brad -

    Hedging will not guarantee pips.  Try you luck hedging in EurUsd and UsdChf.  They have tended to be reverse correlated by up to 99% for a long time.  Thinking that one can use this to guarantee pips, I think is a misconception.  One of the consistent misconceptions was that people could create both a buy and a sell on the same currency and they had to make money.  I think they found out otherwise.  Hedging may be used to reduce risk.  Commercial hedgers hedge in the forex market and if their other investments fail, their forex market hedges will keep them from getting so burnt. 

  • Go to Brad's profile

    On Saturday February 4th, 2012 at 05:32PM by Brad -

    So, in the commercial hedgers case, they will either make a lot more money off their other investments than their hedges.  Or, they will lose a lot of money on their other investments, and their hedges will keep them from tanking so bad.  So, their hedges reduce their overall risk levels.  That is what hedging is all about. 

  • Go to Brad's profile

    On Saturday February 4th, 2012 at 05:38PM by Brad -

    So, the really interesting thing is, that while you want to make money in the forex market, the commercial hedgers are really so badly hoping to lose money in the forex market, because then, their other investments will make them massive amounts of money over what they lost hedging the forex market.

  • Go to beebolbod's profile

    On Saturday February 18th, 2012 at 08:04PM by beebolbod -

    Cant see the point of hedging myself. Choose a direction, target and SL and go with it.
  • Go to RamenHero's profile

    On Saturday February 18th, 2012 at 08:29PM by RamenHero -

    hedging makes sense, but to me not in the forex. but if you were going to hedge, and you weren't using a US broker, you could just open a favored position in a pair and then a reduced but opposite position in that same pair. i don't think you'd have to trade multiple pairs for one hedged position.  

    there are lots of cool correlations in the investing world, though. John Jagerson says he trades divergences in the etf GLD and some USD pair like GPB/USD. I think that's pretty cool. i bet trading XAU/USD and AUD/USD, keeping in mind the negative correlation USD has to AU and the positive correlation AU has to AUD would be a pretty cool strategy..

    i'm not sure how you would apply DJIA and FTSE to forex, though.

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