While some currency pairs will move in tandem, other currency pairs may move in opposite directions, which is the result of more complex forces. However, the interdependence among currencies stems from more than the simple fact that they are in pairs. ![]() The reason for the interdependence of currency pairs is easy to see: If you are trading the British pound against the Japanese yen (GBP/JPY pair), for example, you are actually trading a derivative of the GBP/USD and USD/JPY pairs therefore, GBP/JPY must be somewhat correlated to one if not both of these other currency pairs. Negatively correlated currencies can also be utilized for hedging purposes.In Forex markets, correlation is used to predict which currency pair rates are likely to move in tandem.A positive correlation means that the values of two variables move in the same direction, a negative correlation means they move in opposite directions.A Forex Currency Strength Meter looks at all the common currency pairs and evaluates the strength/weakness. We always look to pair the weakest currency with the strongest currency so that the probability of continuation is at the highest possible point. The greater the correlation coefficient, the more closely aligned they are. In simple terms, a Currency Strength Meter helps you find the biggest movers against peers. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |