Correlation. Do you believe it matters?

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Michael Ampadu
131
Michael Ampadu  
Do you believe in correlation?
Do you take trades on similar currency pairs?

This topic has been debated on several times.
Some traders believe that every currency pair is unique in its own way.
Others too believe that currency pairs with a common pair, for instance, EURNZD and NZDJPY would have a level of negative correlation.

What do you think is better? Taking into consideration the fact that there is correlation or neglecting correlation in all aspects of your trading?
Waseem Raza
9998
Waseem Raza  
Michael Ampadu:
Do you believe in correlation?
Do you take trades on similar currency pairs?

This topic has been debated on several times.
Some traders believe that every currency pair is unique in its own way.
Others too believe that currency pairs with a common pair, for instance, EURNZD and NZDJPY would have a level of negative correlation.

What do you think is better? Taking into consideration the fact that there is correlation or neglecting correlation in all aspects of your trading?

It's true every currency has own effects but correlation can help to a trader in long-term and it's more effective in cross pairs. Bigger capital doesn't mean can defend a trader but with correlation, an opposite force can give enough time to deal and hold, in the same way for long holding trades SWAP makes the vital change but choosing opposite direction at least it can less 70% swap.  

It's my opinion other peoples can debate with their own best experience.

Sergey Golubev
Moderator
106119
Sergey Golubev  

Just some links collected :

============

Correlation

The beginning

  1. Correlation indicators: very good thread with some systems, explanations and good usefull indicators.
  2. Chart Transposition Indicator: original thread.
  3. FINEXX Correlation System and EA - the thread 
  4. Currency corelation - the thread.
  5. trend corelation - discussion thread.
  6. Correlation Index - small thread with indicator
  7. complimentary pairs thread 
  8. Cross-Currency Strength: good thread with indicators.
  9. Pearson correlation thread
  10. Cluster Indicators thread.
  11. Correlation candles indicator (MT5) - the post. Two possible types of correlation used: Pearson correlation and Spearman correlation
  12. Rank correlations (Pearson and Spearman) indicator (MT5) - the post with original version, the post with fixed version. This indicator is using Pearson correlation and Spearman correlation, besides, it has an option to use some of the 22 price types as well as using floating levels

After

  1. Correlation system thread
  2. Currency Correlations, Part I - the video
  3. Currency Correlations, Part II - the video 
  4. MFCS Currency Correlation Chart - MT5 CodeBase indicator
  5. MT5 CodeBase on HowTo - post with the articles
  6. Multi currency EA ideas - the thread
  7. Forex Correlation Theory thread
Sergey Golubev
Moderator
106119
Sergey Golubev  

And about the pairs/currencies - 



Marco vd Heijden
Moderator
8169
Marco vd Heijden  
Michael Ampadu
131
Michael Ampadu  
Sergey Golubev:

Just some links collected :

============

Correlation

The beginning

  1. Correlation indicators: very good thread with some systems, explanations and good usefull indicators.
  2. Chart Transposition Indicator: original thread.
  3. FINEXX Correlation System and EA - the thread 
  4. Currency corelation - the thread.
  5. trend corelation - discussion thread.
  6. Correlation Index - small thread with indicator
  7. complimentary pairs thread 
  8. Cross-Currency Strength: good thread with indicators.
  9. Pearson correlation thread
  10. Cluster Indicators thread.
  11. Correlation candles indicator (MT5) - the post. Two possible types of correlation used: Pearson correlation and Spearman correlation
  12. Rank correlations (Pearson and Spearman) indicator (MT5) - the post with original version, the post with fixed version. This indicator is using Pearson correlation and Spearman correlation, besides, it has an option to use some of the 22 price types as well as using floating levels

After

  1. Correlation system thread
  2. Currency Correlations, Part I - the video
  3. Currency Correlations, Part II - the video 
  4. MFCS Currency Correlation Chart - MT5 CodeBase indicator
  5. MT5 CodeBase on HowTo - post with the articles
  6. Multi currency EA ideas - the thread
  7. Forex Correlation Theory thread


Thank you. I guess I have to take the time to read and understand those threads

Michael Ampadu
131
Michael Ampadu  

Wow. Thank you all for your data. I wanted your personal views on whether it matters or it doesnt.

I guess anyone interested can look at the data provided and decide if it will matter to you or not.

Marco vd Heijden
Moderator
8169
Marco vd Heijden  

It depends on the strategy used.

But i can tell you from experience that at certain specific intervals, for example at the end, or start of a new week or month, analyzing these underlying relationships can be very useful.

Michael Ampadu
131
Michael Ampadu  
Marco vd Heijden:

It depends on the strategy used.

But i can tell you from experience that at certain specific intervals, for example at the end, or start of a new week or month, analyzing these underlying relationships can be very useful.

OK. Thanks
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