Currency link in the market

Currency link in the market

Currencies are priced in pairs in the Forex market, and are not trading in any pair of currencies is totally independent from the other couples. This makes the understanding of the correlation process currencies in Forex trading is very important. As it is there are a lot of factors in the markets that affect the relations between the currency pairs, and these factors influence the movement of the currency pair on a currency pair last of the so-called currency link.

 For example, suppose that a currency pair (a) is moving in the same direction of the currency pair (b), and we are monitoring the movements of the currency pair (a) accurately. We expect that the price rises and buy. While we do not control the currency pair (b) accurately, and suddenly pay attention to this matter, we find that the fundamentals or technical analysis showing the probability of price decline this pair, فنقوم a quick sale. Which could happen in the end to make a profit in the currency pair, and the loss of another pair while the couple walking in the same direction. And the possible occurrence of the same thing if we have to wait for long periods of time or a short to move on a couple of currencies go hand in opposite directions.

When we made ​​up our knowledge about these connections and changes with time, you will be able to exploit in order to control our expense.
The extent of currency correlation coefficient between -1 and +1.
If the correlation coefficient +1, this means that my husband will exchange moving in the same direction 100% of the time. While a correlation coefficient indicates -1 on the currency that my husband will be moving in opposite directions 100% of the time. And if the correlation coefficient between the spouses is 0, this indicates that the relationship between them completely random relationship.

Currency positive correlation:
If the correlation coefficient is a positive number less than +1, this means that my husband currencies are moving in the same direction in general, but not always. And we all approached the number of +1 greater the proportion of the couple move in the same direction.
Negative currency correlation:
If the correlation coefficient is negative number greater than -1, this means that my husband currencies are moving opposite directions generally, but not always.
How do you use to link currencies when trading in the Forex

When you reduce the speed on the highway because of a traffic jam does not necessarily indicate that the rate of speed that will lead him on the whole way will be constant. The thread is دينامكي and change in every moment. Log observations on the link in the last few days, and compare the changes that have taken place over the longer term, to move during the previous year. If the value of the short period of time is quite different from the value of a long period, perhaps it does provide you with an opportunity to trade, but how? Suppose that the couple (a) and (b) has a correlation coefficient value of 0.98 over the past year, this would mean that both are moving in the same direction almost

  , That is, when the price rises pair (a), the price of the pair (b) and will rise at the same speed. But you suddenly discover that the correlation coefficient between the spouses during the month or the last week was 0.10, for example, the couple is moving in the same direction but at a different speed. To make it more clear, let's assume that there are two cars are moving toward the same point, the first traveling at 100 miles / hour, and the second at 10 miles / hour, but we can assume that cars will Taatsawian in the speed in the end, what do we do? Then ride car Alabti.

 
When you turn the previous example to currency trading, we assume that there are a couple of currencies are moving in the same direction, and may move to high correlation coefficient value of 0.60 in the long term, and we discover that the value of the correlation over the past few days, his conversion to 0.20, then arrange any couple rises slower and we buy it, and on the other hand we can take a quick look at the other spouse