What is Correlation Forex Trading?

[Shing1985]

What is Correlation Forex Trading? Any suggestions or strategies about it, can you explain?

 

[sunar14]

What is Correlation Forex Trading? Any suggestions or strategies about it, can you explain?

There are variables which movements seem to be dependent on each other. For example compare movements of USD index (DXY) and XAUUSD. When DXY drops we expect XAUUSD to rise and vice versa. Sometimes it is happen sometimes it's not. Correlation of 1 indicates perfect dependence (movements mirror each other), correlation of -1 is perfect inverse dependence.

 

[radex78]

If we observe there are some pair that having positive correlation and negative correlation, positive correlation like as EURUSD and EURJPY or GBPUSD, these pair usually has a positive correlation, but in fact, the correlation is not always the same, there are certain time EURUSD move larger than EURJPY because this correlation we can try to trading based hedge, buy and sell on the pair and look the development price

 

[Electric Rainbow]

Correlation. in Forex Trading. The relationship between two units (currency pairs) over a period of time. A positive correlation between two currency pairs indicates that the two pairs tend to move in the same direction at the same time.

 

[radex78]

Yes, the correlation between pairs is the relation between currency to another currency, the correlation could in a positive direction and maybe in a negative direction, the correlation recorded on percentage on the table, but this needs certain formula to calculating correlation, the higher number means strong positive correlation, the lower number mean weak correlation

 

[Electric Rainbow]

A currency correlation in forex could be a positive or a negative relationship between two diverse currency pairs. A positive correlation would mean that two currency pairs would be moving in tandem, and a negative correlation would mean that they would be moving in the opposite directions.

 

[sunar14]

A currency correlation in forex could be a positive or a negative relationship between two diverse currency pairs. A positive correlation would mean that two currency pairs would be moving in tandem, and a negative correlation would mean that they would be moving in the opposite directions.

How can we make profit from this knowledge? Do you know any correlated assets so we could bet on deviation from the correlation.

 

[Electric Rainbow]

You could utilize the correlation for reducing your risks or even for doubling your profit. For instance, suppose you decide to buy the AUD/USD currency pair. The secret would be that you could take one or two correlated currency pairs as well as buy them too. You could buy NZD/USD and GBP/USD. If two of them went up and the third one went down, you would be in plus anyway.

 

[FAUZEY_FX]

Correlations means you buy on XXXUSD pairs then sell on USDXXX pairs. I think correlation is good. We can take it as good analysis.

 

[maby84]

Correlation in Forex Trading is all about the relationship that exists between currency pairs, and this is considered over a period of time. If there is a positive correlation between the currency pairs it means that they will probably be moving together in the same direction. So this kind of tendency needs tobe looked out for as it is an important indicator for your trading.