In this article, I will tell you in detail how to use the data from my currency correlation table in binary options trading. You will find the online table with mutable data itself in this article a little lower. In the beginning, I will tell you what correlation is and how it can be used to make money on binary options.
What is the correlation?
Correlation (Correlatio the Latin means "relationship, the relationship") - a definite statistical relationship between two or more random variables. Where a change in the value of systematically accompanied by a change in another variable.
Correlation ratio or correlation coefficient acts as a measurement of random correlation values. Correlation between several currency pairs indicates the existence of a certain statistical relationship. But often, behind the simplicity of correlation analysis, false intuitive conclusions about the presence of any statistical connection can be hidden. To minimize errors, it is necessary to calculate the correlation coefficients, and, based on the correlation coefficient, decide whether to open a deal or not.
The degree of dependence between several phenomena is widely used in economics, statistics, mathematics and, of course, trading. Statistical dependence does not always give a 100% guaranteed result, and the causal relationship is not always so obvious.
For example, looking at crimes in a particular area, you can find a high correlation between the crime rate and the number of police officers in that area. Moreover, the correlation coefficient will be positive. However, this does not mean that if the number of police officers is increased, the crime rate will also increase, and even more so, the decision will not end with success to get rid of crime by closing the police station. The result will be influenced by external factors, which means that it will not be possible to make an accurate forecast.
Correlation coefficients of currency pairs can be either positive or negative. The odds range from -1 to 1 and are calculated using the following formula.
Using this formula and analysis of currency pairs, obtained by processing according to the formula of statistical data, it is possible to measure the closeness of the relationship of different situations.
Communication defined the correlation coefficient can be very strong. For example, we can say that the man who found work in a steel plant will have health problems. And if you increase the time for the worker, the greater the strain on the body he will receive. In this case, the correlation coefficient will tend to -1, we will see a negative correlation.
Objects and events can not be linked. For example, an annual holiday at the seaside director does not affect the life of his slave. In this situation, the correlation coefficient is equal to zero.
If the director does not go with his family to the south, and the saved money to spend on improving the environmental situation in the mother company, for example, the purchase of expensive interior air filters, the milk will begin to issue work, introduce shorter working day. This is undoubtedly a positive impact on worker health. In this example we can see the correlation coefficient is + 1.
From the examples, you clearly understand that by using the correlation can be calculated, and to relate one event to another. However, to calculate the coefficient of correlation can only phenomena. Correlation is possible if there is a relationship between the objects.
How does the correlation of exchange binary options?
To begin with, it should be said that a very small number of private investors use the principle of pair correlation in their trading. Most likely, this is from poor awareness and unwillingness to understand this topic. A professional trader who is aware of the diversification of his trades will always use the currency correlation table before opening a new option. With the help of this simple thing, absolutely any investor can greatly improve their results.
In his work with the binary options, I only trade currency pairs. Therefore, currency correlation is particularly relevant for me. Every time I have an open transaction and I want to simultaneously open another new deal, I'm always watching the other correlated currency pairs to my open trade.
For example, I opened up the option up on the currency pair EUR / USDThen my attention was attracted by the pair EUR / CHF, I saw the EUR / CHF can be taken down. The correlation table I saw the EUR / USD is in communication with the pair EUR / CHF with 0,76 factor. It is highly probable that the EUR / USD and EUR / CHF continue to repeat the movements of each other, thus opening a new deal makes no sense.
Or I wanted to open a deal for the pair EUR / CHF up, I saw that on the EUR / USD pair also observed the trend is up. Table currency correlation, I saw that these couples have a high positive correlation, therefore, here's an extra tip that your prediction will be correct.
Thus, analyzing the number of currency pairs with high correlation properties, you increase your chance of winning!
Now consider the example for clarity
Watching signals Technical Summary in the sidebar of my site, choose intervals 1 hours.
Keep an eye on the pair EUR / USD. When you see the opposite resume actively buying or actively sell, Choose the most correlated currency pair, and open for this pair the transaction for a time ranging from 45 minutes to 1 hours 15 minutes. Depending on what your broker is offering. Remember about the coefficients, a good correlation coefficient is considered from 0,76 to 1 and from -1 to -0,76. In the correlation table, look for currency pairs with the highest degree of correlation. If the correlation is positive, then open one option at a signal, if the correlation is negative, then open one option to the other side of the signal. Thus, in practice you will learn to use correlation and in such a cunning way you will earn money.
The correlation of the dollar and oil
The article will be incomplete, if not to mention one more dependence, known to almost all people, even those far from trading. There is an inverse correlation between the US dollar and black gold. The stronger the US dollar, the lower the cost of crude oil, you can make money on this trading oil CFDs.
The US economy is dependent on oil. The industrial needs of this country require a huge amount of oil. The USA is one of the world leaders in the extraction of black gold. The pumping of oil from its own resources does not cover the domestic consumption of the country. Therefore, America is forced to annually import 8 billion barrels of oil. This is an impressive figure, even for a country like the United States. The more US demand for oil, the higher its price in the financial markets. The more oil imports, the higher the cost of manufactured goods. The increase in prices for goods, negatively affects the national currency of the United States. To all this, the Arabs sell their oil for the Euro. In the aggregate of all this, there is an excessive amount of American dollars on the market and they are beginning to lose value.
See what happens at the time of the global financial crisis that began in the year 2008. At the moment we have cheap oil at $ 40 per barrel and expensive dollar exchange offices, 63 1 Russian rubles per dollar. Therefore, if a technical summary of the EUR / USD with settings ranging 1 hours actively recommend to buy or sell, you can open the option of oil at a time from the 45 1 minutes and an hour 15 minutes away, which suggests a technical summary.
These "codes chit-" trade binary options can be applied in the forex market. Each signal from a technical summary can be filtered on a live schedule additional indicator. If you do not want to do their own analysis of the market, you can trust it to me. In my chat closed signals, I trade daily every weekday. In the chat, you can copy my signals online. Terms of connection to the chat >>>
As you can see, there is nothing complicated about the correlation. Only through the use of the trade of currency correlations, you will be able to diversify risks and increase the number of winning trades. Financial literacy means your profits. I am sincerely glad that you, having read this article to the end, using simple rules and my online tables will be able to earn more.
!!! Tabiths correlation of currencies, hourly (works in online mode + automatic update) !!!
|AUD / JPY||AUD / USD||EUR / CHF||EUR / GBP||EUR / JPY||GBP / CHF||GBP / JPY||GBP / USD||NZD / USD||USD / CAD||USD / CHF||USD / JPY|
|EUR / USD||0.75||0.76||0.35||0.32||0.55||-0.30||0.32||0.63||0.94||-0.87||-0.80||-0.47|