Hello traders, the title of this video is talking about currency correlation trading tactics.
Alright, so do you trade currencies?Do you trade Forex? Do you trade FX? Are you in the FX market? Do you want to useok practical currencies correlation trading tactics? Alright, now we arerecording in video today because a YouTuber, a subscriber has asked meexactly to record this video about the currencies correlation? In fact I've alreadydone it at Georgetrio Youtube channel.
The reason why I'm recordingit one more time is because I want to add new things that can help FX tradersto master currency correlation trading.
It is quite simple; so when we are talkingabout correlation we are talking about relationship alright, the influence ofone currency on the other OK.
How do we compare one currency to the other sowe are talking about if one currency pair is going up, what are the othercurrency pairs that are following suit? So in this case we are talking aboutleadership.
A group of currencies all right, currencypairs that are following another currency pair.
So when we are talking aboutcurrency correlation we are talking about leadership all right but we are alsotalking about the divergence and convergence all right.
So currencies areconverging or doing almost the same thing.
I'm using my words carefully here.
Almost but not guarantee almost the same thing.
Most of the time this another wordthat I'm using carefully.
Almost the same thing and most of the time but notalways all right this is about converging.
Doing almost the same thingok most of the time, but some other currency pairs are doing the opposite of anotherleading currency pair most of the time all right.
This is what we want touse OK.
How can we use that to make practical day, swing and positiontrading decisions in the Forex market? Before we continue, a newtrader may get carried away a little bit with this topic.
I also need to warn traders that there is something else that has changed the currencies correlationtrading all right.
Over the years it was very simple to use a currencies correlationokay to make excellent decision in a currencies market; but over the years thatstrategy has changed.
So what has happened is that we are talking abouthedging activities.
Normally, for instance when the Euro-Dollar is goingup this is the number one example because it's the leading currency pair.
Remember what I said correlation we are talking about leadership so the Euro-Dollaris the leading currency pair so other currencies are following the Euro.
So when the Euro-Dollar is going up, Dollar-Swiss franc going up all right the dollar system (USDCHF) will be going down.
So this is the number one, so this is what the professionals are paying attentionto.
because that correlation between the Euro-Dollar and Dollar-Swiss franc, it works more successfully than any other correlation.
euro goes updollar Swiss franc goes down euro goes down all right galoshes from Gaza ithappened very often so I want to show you now but don't get carried awaybecause of the hedging activity in the financial market so what I was saying toyou that over here the strategy has changed a bit so suppose were a hedgefund manager you are okay an investment bank okay and you want to buy the hillall right so you buy to you with millions of dollars you take position ayou but now you know that all right if the Euro goes down you lose because youare buying expecting to go up if your goes down you lose so what peopleusually do okay they buy the you and then you buy thedollar system and normally we know that thisNativity we know that normally if we buy the Euro the euro is going up we shouldbe selling the dollar she's from yes or no because it dollars is from will dothe opposite of the euro dollar but because we want we want to control therisk that we are taking we buy the you every buy again the dollar system sowhat we are trying to do is that we want to win in all cases so it's like takingokay the opposite position for the same financial instrument it's illegal so youcome by the you and sell you on the same account do you know that you can't dothat you can only take one direction and then close that position because sellingagain so instead of so to go around that rulewe buy the euro and we buy the dollar system so what we agree in fact weAlexei we buy the euro and we are selling the Uwharrie same time whybecause by buy-in it Doris is from okay we are saying that the Euro will go downall right understand because they are negatively correlated we are buying thedollar Swiss form so we are saying that the you dollar we go down but at thesame time we are by the euro dollar so because of roles are hedging activityin the financial market the strategy of using currency correlation is notworking 100% all the time because of the correlation like every other tradingstrategy or investing strategy the market is changes becoming very verysophisticated so old way of trading all the traded my cent are changing all thetime and we adopt a new mindset there are new players in the market alot of headphone big financial situation protecting their position by takingokay the other side heard trade or by protecting themselves making okay thecorrelation okay less reliable so now we are looking now at the euro dollarcurrency pair on the public chart so you can see here this is the mouth ofSeptember this can Genesis back here Sigma 4 Sigma this isthe month of October those two can receive are now closedthis is the new month of November so pay attention to that Lisa T Audra sotalking about currency correlation what would you expect when we stretch threedollars she's from will I spend it Donna's she's from to go up because theyare negatively correlated euro goes down DRA she's far should go up so we willrecheck in now if I stretch through the dollars you from will expect the monthof September and the month of October for a dollar she's want to be up let'sgo and see whether this is true or not all rightno that's just fun yeah yeah it's coming out this is really funso this is this kinda see back here this is the month of September it is themonth of October so here the correlation was verified sothat's why I'm saying to you and we are talking about currency correlation thenumber one play the forex market is the Euro Dollar and Dollar Tree from sothose sometimes some forest traded imported deep pocket I dunno if you areneutral I don't play this anyhow be careful you work on it first master isbefore you go around doing that because some trade I have master the currencycurrency trading will buy it you owe a dollar and a decent and they will showthe Doris is fun alright and I will be explaining that to you while you need tolook for when you are doing that alright so here it is the correlation wasverified it's a negative correlation when one currency pair is going upanother one is going down so because the dollars if is going nowprofessional are shelling the euro but understand that is to know all aboutthis charge that you are looking at on the map Richard or any timeframe it'smore to do with policy now I want to talk about this central bow okaythe US Federal Reserve policy already have been putting up your interest ratebefore everybody else all right okay so boost in the US dollar metellawas benefiting from that time now if the market is not expecting thereto continue with that policy for now for the short term or for a medium term Dorawe start going at the dollar we become a little bit bearish all righton the other hand people were thinking that okay the ECB will continue for thequantitative easing policy all right devalue in a yo in that casethey will be selling you against other currencies all right as I said to youbefore due to the hedging activity this kind of a correlation sometimes no wayokay so talking about currency pair that cap positively correlated to the eurodollar leadership view is the leading concept so there are other currency pairthat will move in the same direction like the euro dollar so I will tell youvery fastly the most important I will not talk about everything elseone example is that the Australian dollar US dollar positively related tothe euro dollar another one the British Pound Japanese yen the British Poundu.
Dora the New Zealand dollar US dollar the Australian dollar Swiss franccurrency pair now an interest rate to traded at the Australian dollarstreet-front currency pair is quite a fearful to the you know sometimes itwill go in the other direction but watch it they would turn around and follow theeuro it may do something else during the Asian sessionoh you do not imagine very slowly you come back and catch a video so you don'tknow okay currency pair positively correlated to the Australian dollar USdollar pound dollar yen fine US dollar New Zealand dollar USdollar Austria da ship from Corsica those are the most important currencypair that I want to talk about I will not go Wow yo so what you need tounderstand every currency pair that is tucked in with your like yo New Zealanddollar you see this column you will Turkish lira and it is starting with theEuro will be positively correlated to the euro dollar all rightthat's the first uniqueness and it is starting with the Euro will bepositively created in the euro dollar but the most important currency pairthat you want to play with is the oh so adorableu.
dollar the pound yem the town mr.
Rodney New Zealand what are you as wellthat he also had well she's fine across Peppa one morning the you BritishPound you need to be careful if you want to play with the correlation becausethere is a lot of hedging activity with the euro British Pound so instead ofbuying the euro dollar and buying at the same time the euro British Pound thehead form and a big financial institution will buy for instantly yougo Gorham I will serve the UO British Poundso this one I'm talking about so the correlation is true positive yes apositive correlation between er your order on the British Pound but due tohedging activity sometimes you may see that those correlations may change butso you have to understand that when we attack la currency correlation you aretalking but also for different world so the United States the dollar against theEuropean the you so we may see that the euro is competing with the US dollar sowe may classify I'm using my work carefully don't banned me for that wemay classify currency starting with the US dollar as negatively correlatedreorder does no true in reality that's not true in reality did number one playtalking about negative correlation the euro dollar and the US dollar shit fromCorsica so don't wanna play with the you the currency correlation anyway howstate today okay the key no the one up professional using yo Dharam negativelycorrelated to the US Swiss firm Chippewa playing that so don't don't do somethingelse you or no no positively correlated to the Aussie dollar US dollar on um enel Torro New Zealand dollar US dollar or silly apology from those are is numberone plane so don't wanna do something else another currency pair that we mayconsider negatively correctly US dollar is the USyen but be careful again hedging activity and all konoba blah blah so inorder to perfect surah now I'm talking seriously now about why you need to dowhy need to pay attention to there are short-term trading decision mediumtrading decision long-term trading decision so when you want to play withthe currency correlation I think it's better to adopt a long term view talkingabout the policy by the Federal Reserve check the kuruma news at the forestfactory so if I show you now the dollar yen alright it is the dollar yeah thisis about a policy so the beginning of 2012 Federal Reserve said at all we willstop quantitative easing we will stop would devalue the dollar and the marketrespond stop by in okay the dollar against other currency especiallyespecially would be buying the dollar against the yen before the FederalReserve even stacks okay putting up interest rate so that I was already upbefore this time making a decision after that the stock going down so payattention should be market sentiment the Federal Reserve we start giving warningphrases like in England so pay attention carefully here is another one I want tomention to you now so recently there were a lot of talk that in long term innot a kingdom or I'm the Bank of England we put up interest this discussion wasgoing on for some time so you hear first the rim ball right am I speaking with mybeautiful a very cultured all right people will be talking about it first sothe policy is very important so is expected todayall right the Bank of England we start putting up interest rates what does itmean to us it means that the town should appreciate against many conscious or sothe long term view for British politics the dollar is bullish I have a warningfor you because we are talking about United Kingdom there's something elsethat the market is worrying about is what we call the breaks it is father toyata Kingdom is coming out of the eurozoneit's also having a negative okay fed on the British bomb though talkingabout the policy butted the Bank of England is bullish for the British Poundthe bracelet is having a negative effect on the British Pound so therefore wewill have a little bit of a mild the bulrush progression for the Britishpound against other currency so pay attention to goals so when you see aconflict in okay policy usually stop on flitting most of the time for itself athere is a stop putting up interest rate first three see boom boom boom and thenyou pause to stop it for a while allowing for instance the Britishgovernment or rather the Bank of England to stop putting on interest rate sothere is something going on now is the globalization of the world this is notmake and not made any how anymore the Act there are consultation going on soyou watch out for the actual federal start first and a British the Bank ofEngland will start and probably the ECB will start later so those are it a needto pay attention to talking about currency collision so you want to payattention towards policy and say when are they pauses when they are posing itmeans that we're going to see a change in the direction so the expectation forthe bridge is found is up so we're expecting the dollar to pull back a bitand so on and so on talking about technical trading what canwe look for look for chart pattern so you may see some time all right likelyBritish Pound or the euro dollar may exhibit a bearish chart pattern at thesame time the US dollar shit firm will a bit okay a bullish ampato euro exhibitin a barrister pattern now if we look at the dollar Swiss firmness is as big asif it in a bullock cart now the correlation is clear that is negativecorrelation one bullet shot pattern here one barrister pattern here we want toplay that that's one way as always don't just jump on it or use it top down tothe middle be gentle because sometimes do the currency may benegatively correct is some time to go up together you'll be surprised your dollargo in now hey Doris is also going don't watch this correlation about sometie it does happen all right but look for chart pattern so forinstance the you old daughter a British spy us Donna are positively correlatednow euro dollar is a bit a bullish our pattern British modulus dollar alsoEasyBib little pattern at a key level well we will trade it the chart issaying that okay bullets are pattern do we know that there is a positivecorrelation we don't want to just buy it will be careful always their service usedifferent come from trading metal to credit or euro dollar is a bit a bearisha pattern dollars she's fine as if it's okay a bullet shot putter negativequalities you want to play solo for chart pattern and see whether there isokay a convergence between the chart pattern or diversion between a chartpattern talking about positive correlation or negative correlationalright so also be aware of the any away part on so today who are following us ato for in your tweets Tube channel can also look for in your with pattern sowhich button is the you exhibiting one is the you inequality face is thecorrelation finish good if the currency is finished we expect an import with yesor no so look for those so your is about ways to start an impulse wave while wewill be expecting okay let the dollars the Doris is want to do also animportant but in the opposite direction so when you is called is for instanceexhibiting a correlation alright we will be looking at okaythe Taurus is from expecting any correction but one will be correcting animpulse with a bullish impossible another will be correcting a bearishimport we expecting the continuation and so so try to play with it with moreexperience so what I'm saying here attention to the central bank policyalright attention to the chart pattern alright market pattern rise eternaldecline channel so you know is coming out of a bullish are you here it isBritish for coming out very sharp a turn this is good check thecurrency that a negative correlated to the British Pound u.
dollar which isthe dollars we found is he coming out of the bullets eye pattern so marketpattern sharp Arkin in your way pattern searcher bumper is she alright but mostimportantly understand that a hedge in activities ok can chain lead enemies ofa currency correlation at credit ductus alright I hope I've given you a few tipsand tricks to improve your currency correlation trading tactics alright soas always okay practice fast and build for yourself or a solid robust okaycurrency correlation a tribe in practice alright so I hope I think I'm a bitchright so if you have any question or suggestion put in a comment session anddo culture we'll be recording on a video to answer your specific question so thiswill conclude our discussion today about talking about currency correlationtrading at practice if you found this video useful please let us know givingus the turns up if you dislike do not hesitate to mark it down it's your rightor what teenies on the social tutorial feel free to share with your friends onTwitter and also on Facebook until next time enjoy your chef and I'd be veryhappy reality HTW 24 accredits talking aboutcurrency correlation correlation training tactics I would like to tellthis trader who asked the question and I think I will post one more video to showtrader more how to deal with currency okay correlation current axis especiallyas a day trader or as a swing trader or as a position data or as an investor soI will be posting those video in the near future thank you for watching andspeak to you soon.