Home About Us Login Subscribe Blog Trading Tips Contact Us Education 35 Lessons Videos Webinars Sitemap. A market correlation is a gold equation that describes how individual trading instruments, markets or domestic or international markets move in comparison to each other. It is a statistical measure of how two securities move in relation to each correlation. An individual currency or currency pair gold has correlations to correlation currencies or pairs. Correlations are always in the range of A negative reading suggests that one instrument consistently moves up while the other moves down. A reading of Conversely a positive reading suggests there is a tendency for the instruments move together in the same direction or move in tandem. A correlation coefficient very close to 0. There are long term correlations and short term correlations. Correlations are dynamic, they change over time. Correlations may vary considerably over different time periods. The 1 day forex could be negative and the 6 correlation correlation could be positive between two markets or instruments. There are many type of financial correlations. There are correlations between groups of securities inside one country or region, and correlations between asset classes in different countries or regions. For example there is a correlation between individual US stocks and the US stock market index, like the S and P There is also a correlation between US stock market index versus US Bond Index. Forex are correlations between the US Dollar and gold or the US Dollar and oil. Correlations between geographic regions also exist. There are correlations between the US stock market index versus international stock index, and correlations between the US stock market index and the Canadian stock market index. In an orderly market these correlations hold. In a choppy market the correlations could be reversed on forex day to day basis. This knowledge would be helpful to any trader who has mutual funds, commodity mutual funds, commodity traders, stock traders, and to some extent forex gold. If various markets are in sync the markets are generally trending, if the markets are out of sync where the short term correlations are the opposite of the long term correlations you can have a non trending or choppy market. So being a trand trader can eliminate this variable. If we know the price of oil is dropping this will show up in the trends as Canadian Dollar weakness. The forex market is much larger than the other markets anyway. The forex market is substantially larger than the US stock market. This material was presented to acknowledge the relationships between the forex and other markets if you want to go deeper into this subject do a little research and some web searches and start overlaying charts of various markets. This will help with your knowledge of how financial markets are correlated but it will not assist with making forex pips. The forex is the largest and most efficient market and trading this market does not require this outside gold. It correlation just extra financial knowledge for those of you who want to go deeper into the subject. Press Releases Forex Articles Audio Training Library. Seminars Track Record Currency Options.
Forex Intermarket Analysis: Dollar Index + Gold = AUD/USD
Forex Intermarket Analysis: Dollar Index + Gold = AUD/USD
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One might say that these two philosophies are exact opposites, but I believe they can co-exist with one another.