Currency Pair Correlation Indicator for MT4

The Currency Pair Correlation Indicator for MT4 is an indicator that is used to take statistical analysis as to how a trading asset or currency pair either moves with or against another trading asset or currency pair. This indicator shows the extents to which the two assets or currency pairs have moved, either is similar direction, in opposite directions to each other and or in directions that are totally random when compared to each other.

The Currency Pair Correlation Indicator was created to help traders visually identify the average moves between any two trading assets or currency pairs of the same time frame under analysis in Meta trader 4 (MT4). This helps the trader to immediately spot when moves have been triggered either on one or both of the trading assets or currency pairs under analysis, either in the same directions or in the opposite direction to each other. 

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Advantages of Using the Currency Pair Correlation Indicator for MT4

One of the biggest advantages to the trader who uses the Currency Pair Correlation Indicator in MT4 trading is that the trader using it doesn't need to flip between the two different currencies under analysis to see what moves are happening on each pair or trading asset and how they are related to each other with positively or negatively, and also how they affect each other.

The Currency Pair Correlation Indicator for MT4 is also very robust and highly effective in spotting price divergence between two particular trading assets or currency pairs that are normally supposed to be moving in the same direction but for some reason move in different direction briefly. This dissimilarity in the price movements between the two trading assets or currency pairs immediately creates a profitable opportunity for the trader where he or she can choose to buy one of the currencies or trading assets and sell the other currency or trading asset.

The Currency Pair Correlation Indicator for MT4 being used to detect a trend change.

Usually, the Currency Pair Correlation Indicator can easily spot price divergences and the trader can capitalize on buying one of the currencies or trading asset and selling the other currency or trading asset, because their prices will eventually trade back to an average price and move in the same direction together again after a short while, since a lot of traders would have already capitalized on the opportunity as soon as it appeared, thereby diminishing or ending the opportunity window for late traders.

Think about it in terms of two markets, market A and market B. The price of apples in both markets are usually similar, so if the price of apples in market A is $15, the price is also almost $15 in market B. The prices of apples in these two markets also fluctuate together, so say the demand for apples increased, the price of apples would surge up to about $22 uniformly in both markets.

The Currency Pair Correlation Indicator for MT4 being used to detect a trend change.

Now, one day you realize that the price of apples is $22 in market A but because of a new supplier in town, the price in market B has dropped to about $7. This creates a very unique opportunity and also a very short time window to exploit the opportunity as once apple buyers and sellers realize the price difference, they are very likely to buy a whole lot at the market B because of the low prices and then sell a whole lot at market A because of the high prices.

The Currency Pair Correlation Indicator for MT4 being used to detect a trend change.

When this is done by the traders a number of times, the prices of apples in both markets return back to being uniform as a lot of traders have become aware of and exploited the opportunity. The example is literally the same for any two positively correlated trading assets or currency pairs that suddenly experience a divergence in prices between them.

Possible Trading Ideas using the Currency Pair Correlation Indicator for MT4

Some Pairs that could be monitored and analysed by a trader to detect possible divergence since they are positively correlated include the EURUSD and GBPUSD pairs, the USDCHF and USDJPY pairs, the AUDUSD and EURUSD pairs, the AUSUSD and GBPUSD pairs and finally the EURUSD and NZDUSD pairs.

The Currency Pair Correlation Indicator for MT4 being used to detect a big move.

With the mentioned pairs, the trader can then look our for the price divergence between them, and then be prepared to take swift advantage of such unique trading opportunity.

The Currency Pair Correlation Indicator for MT4 being used to detect a big move after the indicators re-expanded.

The trader using the Currency Pair Correlation Indicator can then search for when the prices of each of the trading assets or currency pairs are either moving in the same direction together or when they are both moving in completely opposite directions. Traders would then need to determine to which degree these correlations and divergences are happening and take advantages of the most obvious and or the largest moves. 

 

 

 

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