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Chapter 37, Part I. Intramarket Correlations. Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 28, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Pipruit:
    Right. And what is the second type table?

    Commander in Pips: The second kind of table creates for single pair but different time frames. It usually looks like this:


    [​IMG]

    In fact, you may use any terms for which you would like to calculate correlation, depending on your needs. If you are short-term trader, probably you will be interested in 1 week correlation, while if you hold position long-term, then you probably will need 6 moths or even a 1-2 year correlation.

    Pipruit:
    Ok, I see. The major thing that I have to note is that high numbers of correlation tells that pairs mostly move in the same direction while negative number close to -1 tells that they move equal but in counter directions. If correlation is close to zero – then there is an absence of any relation and pairs move independently.

    Commander in Pips: Yes, you’re absolutely right. But what will be application in trading?

    Pipruit:
    Hm… Really. How we can use it?
     
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