Monday, April 27, 2015

New Correlation Signal AUD/USD & GBP/USD

*Trade Update:  The Global Currency Scalper took 1/2 its position with a long in AUD/USD @ 0.78693 and a short in GBP/USD @ 1.52212.  We covered the positions at 0.79975 & 1.53197 respectfully picking up 29.7 Pips on 75% of our 1/2 size position.  We will be holding the remaining 25% while the correlation continues to narrow.

As of 04/27/2015 @ 22:45 EST:

The Global Currency Scalper is watching and taking half a position in a correlation trade between AUD/USD & GBP/USD.

In the chart above you will see AUD/USD is the candlesticks, GBP/USD is the blue line and the yellow line is EUR/USD.  We will be ignoring EUR/USD for this trade.  The correlation we are targeting is exclusively between AUD/USD & GBP/USD.  As you can see during the past year the correlation between the two fluctuates between trading in parity to spreads as wide as 600 Pips.

Today this spread is approximately 200 Pips therefore we will be initiating 1/2 our position, this will allow us to get involved in the trade while waiting for the spread to widen.  Our position will be LONG AUD/USD and SHORT GBP/USD.  If we see a spread of 300 pips or more we will add the second half of our position.  If the spread narrows from our entry we will take the profit and move on to another trade.

This trade does not present the amount of risk a directional trade does and allows us to profit when the correlation narrows, and it will narrow.  Patients is needed with these trades and the Global Currency Scalper recommends not using high leverage as these trades can take many days or even a couple of weeks to work themselves out.  Not using high leverage will allow you to take your traditional directional trades while holding a correlation position.

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