American traders have been developing and improving this method of short-term trading for more than six years. Inputs and outputs have been modified. As a result, the system was called “Going Home Trading Method”. The majority of couples, which are positively correlated above 75%, “live” below the “difference” line by 20-25% on one indicator, which is used in this system (see below – Stochastic Different Pairs). This is their home. Sometimes they will travel close to home (maximum 50%), and sometimes they will travel for a long time (more than 80%). But they eventually return to less than 20% where they live most of the time. Deals open when couples are away from home and make a profit on the way back.
The whole system consists of five steps
- Go to https://www.mataf.net/ru/tools/01-01-correlation and mark all couples.
- DAYLY CORRELATION and mark each pair with a positive correlation of 75% or more. We’re choosing two pairs to trade. For example, USDCAD and USDJPY are selected with 80% correlation.
- MT4 graphics platform for these pairs. Place the “Stochastic Different Pairs” and “OverLayChart” indicators on each chart. For correct operation of the “Stochastic Different Pairs” indicator, we set the symbols First Symbol and Second Symbol. For the “OverLayChart” indicator, set Sub Symbol. As a result, the main chart shows the chart of the correlated pair.
- 80% and turn in the same direction, and the correlating pair has fallen below
Buy when the stochastic is below 20% and the correlated pair moves upwards
This method can undoubtedly work for longer periods as well. Trading on negative correlation is also possible. In that case, the rules change to the opposite. There are also automated trading programs for this method. The script and Expert Advisor for those who want to understand them are attached below.