CURRENCY PAIR CORRELATIONS – FOREX TRADING

Co-Relation Analysis Indicator

in this plugin, we can measure the co-relation strongness between different currency pairs so it will help that if you are buying any pair then against that they should Buy/SELL another currency pair.

https://video.drift.com/v/abzb8MdUuLG/

»Understanding price relationships between various currency pairs allows to get a deeper insight on how to develop high probability forex trading strategies.
»Awareness of currency correlation can help to reduce risk, improve hedging and diversify trading instruments.
»In this article we will introduce you to forex trading using intermarket correlations.

Meaning of currency pairs correlation in Forex
Correlation is a statistical measure of the relationship between two trading assets. Currency correlation shows an extent to which two currency pairs have moved in the same, opposite, or totally random directions within a particular period.

Correlation is typically measured in decimal form on scale of -1 to +1 to give you a figure named a correlation coefficient.

*A correlation of +1 shows that two currency pairs will move in the same direction 100% of the time. That is a perfect positive correlation. Correlation between EUR/USD and GBP/USD is an accurate example, as if EUR/USD is trading up, then GBP/USD is moving the same direction.

Impact of currency correlations on Forex trading

*A correlation of -1 indicates that two currency pairs will move in the opposite direction 100% of the time. EUR/USD and USD/CHF have a perfect negative correlation, thus if EUR/USD moves upwards, then USD/CHF goes downwards.

*A correlation of zero takes place if relationship between currency pairs is totally random, which means they have no link at all.

*Can avoid positions that effectively cancel each other out.

*Can allow to hedge or diversify exposure to the forex market.

Currency correlations change in Forex

»Be aware that currency correlations are constantly changing over time due to various economic and political factors. These often include diverging monetary policies, commodity prices, changes in Central Bank policy etc.


WHERE TO CONTACT US
Website : www.flashtrade1.com
Twitter : twitter.com/flashtrade11
Telegram : telegram.me/ft113
Facebook : www.facebook.com/FlashTrade1
Instagram : www.instagram.com/flashtrade1/
You-Tube : www.youtube.com/FlashTrade1
Skype : flashtrade1@outlook.com
Mail ID : info.flashtrade@gmail.com