This is a powerful knowledge for those who trade more than one currency pair. It helps to hedge, diversify or double profitable positions. A correlation of zero means no eur chf mataf forex analysis between currency pairs exists. Information about current correlation coefficients can be found here: Currency Correlations Table.
How a trader can use this information? A very simple use is avoiding trades that cancel each other. However, there is a strategy of hedging one currency pair with another. For example, a trader has opened long positions on both currency pairs. Learn to how to day trade the EURUSD in two hours or less per day. See the best times of day to trade, what time frame to us, and how to enter and exit trades.
Learn how to manage risk and plan out each trade. View the examples and then start practicing the method yourself. The following guide assumes a basic understanding of how the forex market operates. If you are new to forex, check out Introduction to Forex, which provides some background on trading currencies. Basic Guidelines Most of my day trades in the forex market are based on these simple concepts.
For simplicity, assume I am talking about an uptrend unless otherwise noted. The same concepts apply to downtrends. I trade for about two hours per day, that is all. Only trade in the direction of the trend.
The pullback must stall out or show signs the price is starting to move back in the trending direction before reaching a major prior swing low. Buy a breakout above the high price of the consolidation. If the price stalls and then breaks out in the opposite direction of the overall trend then there is no trade. As long as the trend is intact, continue to look for pullbacks, consolidations, and then consolidation breakouts in the trending direction.
Stop Losses and Targets are set at the start of each day and may be slightly adjusted during the day based on expanding or contracting volatility. Exit all position at least two minutes before major news events. For the EURUSD and GBPSUD that includes major news related to the EUR, GBP, USD, and CHF. Don’t trade until after the news is released. Cancel all pending orders before news and when you are away from your computer.
Knowing the strategy isn’t enough, and below there are multiple examples of this strategy in action. Price is constantly moving, so we need to be able to plan our trades before and as they are forming. Before a trade is taken we also need to know what we will do once we are in the trade, depending on what the market does next. Most people look at what has already happened on their chart, come up with one trade idea and then pray it works out.