Knowledge Base

  • What to Expect When Using TradeGoose

    As the Current Correlation value increases, Trade Goose will begin taking trades. (Always buying and selling correlated pairs simultaneously.) The higher the increase in Current Correlation, the more trades will be taken, up to four "Levels" of trades. As this occurs, your account will draw down.

    Expect to have a drawdown. It is part of the hedge trading strategy. As Current Correlation increases, a fifth level is taken and the oldest level (level 1) will close at a loss. As the system continues to take new levels, it will always close the oldest level as the new level is taken. For example, if level 6 is taken, then level 2 is closed down at a loss, etc.

    Taking these losses is a vital part of the strategy and is a necessary aspect of the system. As the Current Correlation begins moving back toward zero, Trade Goose takes profits by closing pairs whose combined equity has reached a predetermined "Profit Target". The greater the back and forth motion of the correlated pairs, the greater the opportunity for significant profits.

    Expect your account balance to fluctuate as the system closes out old levels and opens new ones. For example, your account balance may be at a gain for the month of 7% one week only to see it drop to 5% the following week. Such fluctuation is normal and is to be expected. Past performance indicates that, over time, gains outweigh the losses producing above average returns.

  • How Does TradeGoose work?

    Trade Goose uses a hedging strategy that enters trades based on the correlation of two positively correlated pairs. Positive correlation indicates that both currency pairs generally move in the same direction. If these pairs are ideally correlated, then Trade Goose identifies that "Current Correlation" value at or near 0. (Zero) When correlation becomes misaligned, the Current Correlation value gets further from zero. (either positive or negative) The greater the misalignment, the greater the increase in Current Correlation value. Trade Goose constantly monitors Current Correlation and initiates trading accordingly. In order to balance high misalignment we also add the third pair.

    For example, imagine a rubber band hung loosely around your finger. In that state, consider it's Current Correlation value at zero. As you pull that rubber band toward you or away from you, it's Current Correlation value increases, either positively or negatively.

    Like the rubber band, correlated currency pairs want to get back to zero correlation and will eventually do so. As that happens, profit opportunities are created.

    In summary, Trade Goose is a short term, hedging strategy which profits from misalignment in the correlation of two positively correlated currency pairs, and for more safety we add the third pair to make the hedge more neutral. This prevents from having heavy drawdowns.