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.

Organizing trading using the Correlation strategy.

1. Time frame for trading – M30 or longer, the strategy assumes the presence of stable trends.

2. Deposit – preferably at least $1000, the size of the deposit does not affect the efficiency of trading, it only regulates the amount of earnings.

3. Transaction volume - since transactions will have a fairly long duration, when choosing a trading volume, the following rule should be observed - the transaction volume should not exceed the funds in the account by more than 40 times, that is, we use a Forex leverage of 1:40 .

4. Currency pair – selected depending on the market situation; to do this, simply simultaneously analyze the movement of currency pairs on the same time frame. All charts must have the same scale and display method - bars, candles or line.

In our case, such pairs were EURUSD and USDCHF; there is an inverse correlation between them with almost zero deviation.

It will be better if you find a pattern in which one of the pairs will react to an event earlier, and the other with some delay. Moreover, there can be more than two pairs. 5. A technical tool for a correlation strategy - such a tool is the indicator of the same name, which allows you to display information on 5 currency pairs at once - download the correlation indicator .

The correlation strategy itself is built according to this scheme.

1. Finds several currency pairs, preferably with a certain latency coefficient for one of them.

2. We observe the movement of the trend on the signal currency pairs and when a new trend appears, we open a deal on the main currency pair (the one that is lagging).

3. The opposite situation serves as a signal to close a transaction.

As correlation tools, you can use not only currency pairs , but also gold or silver.

There are more complex options for correlation trading, but they are all built on a similar principle.