AUDUSD NZDUSD 5M - Correlation Arbitrage
Correlation arbitrage - Published 04.08.2016
Please change timeframe to 5 minutes.
I'm not recommending an arbitrage play at this time. I'm only trying to open up the eyes of traders to these 'arb' plays. AUD and NZD are high correlated due to their interlocking economiesand both trade at a fair spread to the USD. So when you see these pairs go their separat ways there is usually a way to profit.
First you have to look at a fairly low timeframe 5M does it for me, also when you look at the divergence always look at a long time graph (Tradingview isn't displaying enough data) minimum of 2 months of data.
See attach photo.
If you trade small enough you can afford to keep the position even it moves rather hard against you and you don't have to close a floating loss untill the pairs are correlated again.
Please change timeframe to 5 minutes.
I'm not recommending an arbitrage play at this time. I'm only trying to open up the eyes of traders to these 'arb' plays. AUD and NZD are high correlated due to their interlocking economiesand both trade at a fair spread to the USD. So when you see these pairs go their separat ways there is usually a way to profit.
First you have to look at a fairly low timeframe 5M does it for me, also when you look at the divergence always look at a long time graph (Tradingview isn't displaying enough data) minimum of 2 months of data.
See attach photo.
If you trade small enough you can afford to keep the position even it moves rather hard against you and you don't have to close a floating loss untill the pairs are correlated again.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.