Strategy "Correlation".

It's no secret that there is a clear relationship between the prices of currencies and other financial assets. Almost every trader knows that when the price of gold rises, the Australian dollar rises; such a relationship can be seen almost everywhere; the main thing is to be able to use it correctly.

The Correlation strategy involves detecting patterns in the price movements of certain currency pairs; it is attractive due to its simplicity and effectiveness. To use it, it is not necessary to have deep knowledge in the field of technical analysis; it is enough to have a certain amount of observation.

The easiest way to understand the essence of such a Forex strategy is through specific examples of trading, which in turn can serve as a kind of example.

Organization of trade using the Correlation strategy.

1. Trading time frame – M30 or longer; the strategy assumes stable trends.

2. Deposit – preferably at least $1,000. The deposit size doesn't affect trading efficiency; it only regulates the amount of profit.

3. Trade volume – since trades will be quite long, when choosing the trade volume, the following rule should be followed: the trade volume should not exceed the account equity by more than 40 times, i.e., use a Forex leverage of 1:40.

4. Currency pair – selected based on the market situation; to do this, simply analyze the movement of currency pairs simultaneously on the same time frame. All charts should have the same scale and display method – bars, candlesticks, or lines.

In our case, these pairs were EURUSD and USDCHF, which have an inverse correlation with virtually zero deviation. It would be better to find a pattern in which one pair reacts to an event earlier, while the other with a slight delay. Moreover, there may be more than two pairs.

5. Technical tool for the correlation strategy – this tool is the indicator of the same name, which allows you to display information on five currency pairs simultaneously – download the correlation indicator .

The correlation strategy itself is built on the following scheme.

1. Find several currency pairs, preferably with a certain lag factor for one of them.

2. Monitor the trend movement on the signal currency pairs and, when a new trend emerges, open a trade on the main currency pair (the one that lags).

3. The opposite situation serves as a signal to close the trade.

Correlation instruments can be used not only with currency pairs , but also with gold or silver.

More complex correlation trading options exist, but they all follow a similar principle.