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un-correlated currency


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un-correlated currency

  #1 (permalink)
zuhier Dourgham
Dubai, UAE
 
Posts: 2 since Sep 2019
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Hello

I have start trading Forex from more than 5 year, initially I was trading any pairs available on platform, but I found that lowering the traded pair will reduce my potential risk, so from last year my trading limited to the following pairs: EURUSD, GBPUSD, GBPJPY, USDJPY, USDCAD, GOLD.

after that I got a glow about the correlation of currency and how they tending in the same direction, like if EURUSD up trend you can expect a same direction on GOLD, but the problem is that if I went long on EURUSD and took a look at GOLD and got a weakness sign from GOLD then my thinking will be as following I'm longing EURUSD but the GOLD is weak and it maybe went down so longing EURUSD is mistake and I have to close my trade.

After I get into future trading and institutional trading most of professional trader that I have met they informed me they used to trade just 1 or 2 pair to avoid and correlation conflict and to concentrate on small amount of pairs.

Right now I decided to reduce my trading to 2 or 3 pairs but they should be not correlated, how can you help me to solve this problem?

Sorry for pour English, hope you understood me well.

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  #3 (permalink)
 
TrendFollower1's Avatar
 TrendFollower1 
Austin, TX
 
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If you're still looking for this information, the sites below may be helpful.

https://www.investopedia.com/trading/using-currency-correlations-advantage/

https://www.cashbackforex.com/school/currency-pair-correlations/

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  #4 (permalink)
 Trendseek 
Leipzig / Germany
 
Experience: Intermediate
Platform: NT / TS, MC and Clones
Broker: Interactive Broker
Trading: Futures, Forex
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@zuhier Dourgham

Good Idea - bad example :-)
The Correlation between GC (Gold) and most of the Currency-Pairs is just moderate.

A good overview about the correlations between different pairs of Currency (for different Time-Frames) you will find on:

https://www.mataf.net/en/forex/tools/correlation

You will find out, that the overall correlation (better: covariation) between Currency Pairs rise, when the observed timeframes become longer (1 Hour, 1 Day). On shorter timeframes (i.e. 5 Min.) you will find lower (and less stable over time) correlations.

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Last Updated on April 17, 2020


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