Follow The Leader Correlation Forex System

Like all correlation trades, “Follow the Leader” waits until two correlated pairs go “out
of whack”, and then quickly capitalizes on the opportunity to scalp some quick pips out
of the market.
Here’s how it works…
For this system I like to trade the EUR/USD along with the GBP/USD. These pairs are
positively correlated, so as expected they are more or less moving parallel to one another
(as you can see in the screenshot on the next page).
But when we’re trading with correlation, we’re not only looking at direction…we’re
also looking at the RANGE.

“Range”: The difference between the high and the low prices
during a specified period of time.

We know, for example, that the GBP/USD normally has a much larger range than
the EUR/USD. (NOTE: I don’t have the time right now to go into why the range of the
GBP/USD is larger, but if you look at the two charts side-by-side you’ll be able to see
with the naked eye what I’m talking about.)

In other words, while these correlated pairs will generally move in the same direction,
the GBP/USD should have lower valleys and higher peaks than the EUR/USD. So, when
we see that the range of the GBP/USD is lagging behind the range of the EUR/USD for
one bar (see screenshot below), we have a potential trade setup.

Once the “range lag” is 20 pips or greater, we take the trade with the expectation that
the GBP/USD will make up the “gap”, and overtake the range of the EUR/USD within a
few bars.

Remember, we know this is an extremely high probability trade, because “Fundamental
Law” dictates that the pairs MUST remain in correlation, so therefore we know that they
will eventually “snap back”.
Like I said, it’s a simple strategy, but because it’s backed by market fundamentals it’s
one of the most accurate (and profitable) intra-day strategies I've ever traded.

Ok, so let’s go back and take a look at the chart

Right now the range of the GBP/USD is lagging the EUR/USD by 8 pips. That’s enough
of a lag to take notice, but it’s not enough to take the trade yet.

Remember, I like to see at least a 20 pip lag before I take the trade, so I’ll watch it for
another bar and see what happens…


When the second bar closes, the range is now lagging by 15 pips. It’s still not enough for
me to take the trade yet, but the fact that the range lag still hasn’t corrected itself (and is
actually growing wider) has me very excited.

I’ll wait and watch it for one more bar and see if the “range lag” or “crack” widens
enough for me to take the trade…

The third bar has closed, and the “range lag” has now widened to 24 pips. That’s greater
than the 20 pip minimum I need, so I’m going to take this trade and go long on the
GBP/USD.

My expectation is that the GBP/USD will at a bare minimum make up the 24 pip
“range lag” or “crack”…and possibly even go beyond that since historically the range
of the GBP/USD is supposed to be LARGER than the EUR/USD
And again, when we’re trading with correlation and something goes “wrong” (as is the
case with this “range lag”), that usually means there’s a profit opportunity just around
the corner.
Now that we’re in this trade, let’s watch it and see what happens next…


As you can see, the very next bar the GBP/USD made up the “range lag” and returned to
“normal” just as we expected it to. We then exit the trade at the end of the bar and
pocket the 24 pips.

So there you have it…the “Follow the Leader” strategy!
So to recap, all you need to do is:
1) Watch these 2 pairs simultaneously.
2) Track the movement of both pairs at the close of each bar.
3) Once you see one of the pairs begin to pull away, pay attention because you are
now looking at a potential trade setup.
4) Calculate the “range lag” or “crack” and when it exceeds 20 pips, you’re ready to
pull the trigger, and you know what your target will be, as it will be always be
about equal to the “range-lag”!

I’m confident that this one strategy alone will make you a more confident, accurate and
profitable trader, as these trades are ultra high probability trades to take, and I LOVE
when they set up...

Follow The Leader Correlation Forex System Follow The Leader Correlation Forex System Reviewed by Yonif on July 22, 2018 Rating: 5

9 comments:

  1. So I am wondering if what I am doing with the FTL v twin EA is fine? I installed it for only 1 correlation pair, so I installed it on the EUR/USD 1 hour chart and I set the Gap to 40 pips instead of the defaulted 100, and using .10 contract size it has made 164 dollars on a 1500 dollar demo account, will this work the same on a real account or will it fail once on a real live account?
    The reason I ask is because that is awesome, that is like 16% in a full day, here is a screen shot for you guys to examine, please let me know what you think.

    So I am wondering if what I am doing with the v twin EA is fine? I installed it for only 1 correlation pair, so I installed it on the EUR/USD 1 hour chart and I set the Gap to 40 pips instead of the defaulted 100, and using .10 contract size it has made 164 dollars on a 1500 dollar demo account, will this work the same on a real account or will it fail once on a real live account?
    The reason I ask is because that is awesome, that is like 16% in a full day.

    ReplyDelete
    Replies
    1. i has lounched bluefish EA sir,.. that is better than this old EA with two correlation system

      Delete
  2. There is a wealth of Forex preparing data: books, online courses, sites and even chances to rehearse forex exchanging. These can assist with planning you in any case, there is a stage between contemplating Forex exchanging and really trying that data. visit website

    ReplyDelete
  3. In opposition to what each Forex 'master' out there would have you accept, it is difficult to figure out how to exchange Forex by any stretch of the imagination. Alexis

    ReplyDelete
  4. In opposition to what each Forex 'master' out there would have you accept, it is difficult to figure out how to exchange Forex by any stretch of the imagination
    Fortissio

    ReplyDelete
  5. Safety & Security of the site: It is important to check all the inbuilt security features that are built in your system. forex course etc

    ReplyDelete
  6. This is such a great resource that you are providing and you give it away for free. I love seeing blog that understand the value of providing a quality resource for free. 1000Pip Forex Signals reviewed

    ReplyDelete
  7. Flexibility is another element that characterizes a proficient program. At the point when we state flexibility, we imply that the product has the ability to reflect exchanges to numerous records consequently placing you in a superior situation to open and close exchanges.Algorithmic trading

    ReplyDelete

Powered by Blogger.