Everything is interrelated in the currency markets. It is important for you to understand that the price action of each currency pair is not mutually exclusive. Different currency pairs move relative to one another. You need to understand that different currency pairs are correlated. Every currency pair has a relationship with other currency pairs just like our human relationships. Now currency correlations can be positive or negative. Knowledge of how strong this relationship is and its direction can help you in developing your trading strategies with a new perspective. This has the potential to become a great trading tool for you. Trading Currency Correlations can be highly profitable if you know how to do it. Jason Fielder is a legendary forex trader who has come up with two very great free reports on trading Currency Correlations. If you want to know more how to trade currency correlations don’t forget to download your Correlation Code Secret Report and the Currency Correlations Cheatsheets! For the Correlation Code Secret Report click on the left resource box on this page!
Correlations are numbers ranging between +1 and -1 that are calculated based on past pricing data between different currency pairs. These numbers can provide you with information that can maximize your trading returns, minimize risk and help avoid counter productive trading. Let’s make it clear with an example. Suppose USD/JPY and USD/CHF had a positive correlation of +0.83 last month. This number is close to +1 and means that both pairs are moving together most of the time in the same direction. Now, if you are trading USDJPY and USDCHF at the same time, it will double up your position if you take long positions or short positions on both at the same time. If you lose a trade on USDJPY, the chances are that you will also lose the trade on USDCHF 83% of the times.
Let’s take another example. EUR/USD and USD/CHF both have a negative correlation of -0.9 in the last month. It means both the pairs were moving in opposite directions last month. If you take long position on one, it is not a good strategy to take short position on the other. It will only double up your position again and increase risk. When investing in two pairs at the same time, try to choose such pairs that have correlations close to zero. This will make the two pairs almost independent of each other and you can invest in both of them safely. Always keep this in mind that currency markets are constantly changing. The correlation between currency pairs also keep on changing. It would be a good idea to calculate the correlations between pairs on a monthly basis.
This is what Jason Fielder says about his Currency Correlations Trading System: I trade in under 15 minutes per day. If you’re thinking that doesn’t sound like enough time to do a proper analysis of the markets, you’re probably right……IF you’re doing all the work yourself.In the past few days, I’ve received THOUSANDS of emails from traders jumping out of their skin with excitement! And the craziest part is so far only they are only excited about one thing…The fact that correlation is an insanely accurate trading system because its approach is based on “Fundamental Law” (which means the trades you are taking are based on what NEEDS to happen in the market, not on what you THINK will happen…But guess what… that’s not even the best part!
What is, is that not only is The Currency Correlations Trading System a whole lot more accurate than what you’re likely using now, but that it literally “reads” and interprets the markets for you! And this allows me to trade in under 15 minutes per day. The Correlation Code Trading system, actually TELLS you where to get in and out, by printing lines on your charts! So if you can read a line plain as day on your chart, you know that it’s either your entry or target…Yep, it’s that easy. Now, from the thousands of comments I’ve received I notice a number of traders like to swing trade to compliment their scalping or day trading. I can tell you that’s the way I like to trade myself. So I’ve recorded a special video on swing trading today, where I show you how I set up three different trades for three different market conditions, and I do ALL of them in under 15 minutes. And the “edge” you get over other traders when you use the power of correlation, combined with the indicators I use…Is a total game changer. Tomorrow I have a HUGE announcement; all I can say now is that you’ll want to be around to hear it, because only a limited number of traders will be able to take advantage of it…
Hassam 