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The trading strategy on the correlation of the assets

The adepts of short and middle-term strategies are sure to accept the system based on correlation. Such an approach requires fundamental assessment and supposes the trades’ manual opening. The independent trade allows the trader to select the optimum level of strategy aggressiveness.

The correlation stands for identical movement of currencies pairs exchange rates. It allows conducting the trade at Forex market without technical instruments. The correlation coefficient can have both positive and negative values. In the case of 1 coefficient, the trends are synchronous. The -1 coefficient can be seen in the case of the exchange rate opposite direction. In case if the value is in -1…+1 frame, the level of trading pairs influence is directly proportional to the coefficient.

The customer has to select optimum assets for strategy efficient implementation.

The correlation coefficients are calculated with the help of the chart.

  •       Correlation marked in red is the strong one;
  •       Average correlation is marked in yellow;
  •       Grids without color background mark a weak or absent correlation.

Specific traits of trading on the correlation

For the strategy successful application it is necessary to follow the following instruction:

  •       Opening of currency pair with high dependency coefficient. It does not matter if this pair will be direct or reverse.
  •      Search for news directly influencing the trend direction. Next, it is necessary to wait for new impulse at the first chart, while other charts will have weak or tardy assets movement.
  •       Orders opening: in case of positive correlation be sure to select exchange rates in the direction of impulse movement. In the case of the back one, the pairs with impulse mirror movement are suitable. The best time frame is 6 hours. It is better to conduct trading at London or European sessions for getting a return.

The trading strategy seems to be very simple at the first glance. But for its efficient implementation, it is necessary to consider various pitfalls. Such a system is mainly suitable for professional traders, while novices can check their skills with small investments as well.

The trading based on correlation allows making an extremely accurate forecast of new impulse and finding the most suitable moment for market entry. This strategy has been approved as one of the best ways for sifting false signals to make trade more profitable.

The customer has to select optimum assets for strategy efficient implementation.

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