How to Trade Currency Pair Correlations in Forex IG UK
How to Trade Currency Pair Correlations in Forex IG UK
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Hi there guys, Welcome back to my weekly rants. Decided to add some info that should be pretty useful to your daily trading, thanks to the comments of u/Neokill1 and u/indridcold91. If you have not read the rest of the series, I recommend you take your time and read those before continuing with this piece (check my user activity and scroll down...) This rant is based on this little comment I posted on the last post: Price moves because of the imbalance between buying and selling. This happens all the time. Price move where liquidity is, and that seeking of liquidity makes the price to go up and down. Why price extends on a particular direction? Because longer term players decide it. So the idea behind what I'm writing about is to follow that longer-term trend, taking advantage of a counter-trend wave that is looking for intra-day liquidity. If I'm bullish on the week, I want to pair my buying with intra-day selling. Because I expect longer-term traders to push price by buying massively. And instead of riding a big wave, I want to ride that push and get out before it retraces. And also answers to this: why for example would it make sense to draw support/resistance lines on a EUUSD chart? Why would anyone "support" the price of a spread?What are you predicting to happen by drawing those lines, that someone will exchange their currency there simply because it's the same price they exchanged it for in the past and that number is special to them? A good question that deserves an answer That question is a pretty good one, and one any trader worth of that name should ask himself why. Why price reacts the way it does? Why price behaves in predetermined ways? Why if I draw a line or area on specific candle places, I expect the price to react? And the answer is simple and at the same time kinda complicated and fascinating. Why price rallies and rallies andd rallies and then suddenly it stops at a point ,and reverses? . The answer is , because there are sellers at that point. There is liquidity there. There is people at that point that decided it was worth to sell enough to reverse that rally. All the market does is to put together buyers and sellers. If you want to buy something at some price, someone must agree with you. If no ones agrees, then you will have to offer more. When buyers and sellers agree on similar terms, price is stable. Buying and selling happens on a tight range, because both consider that particular price range worth. But then, perhaps, someone wants to buy big. And there are not enough sellers. This big boy will dry the available liquidity , and it is hungry for more. So price will move from a balanced state to an imbalanced state. This imbalance in volume between buyers and sellers will cause the price to move up, taking all available liquidity till the monster is satiated. Then the exhaustion of bids, or buying, will cause the price to reverse to a point where buying interest is back. The same applies for selling activity. The main take away you should get from this is simply that the market keeps moving from balance to imbalance to balance to imbalance all the time. And the points where the big bois deploy this activity of buying , of selling, of protecting levels, of slowly entering the markets, are mostly predetermined. Surprised? Most of the institutional activity happens at : 00 ,20, 50 and 80 levels. So why drawing a line makes sense? It makes sense because when price stalls at some point, is because sellers or buyers stepped in and stopped the movement. Its a level where something interesting is happening. It's a level where liquidity was present, and the question is, what is going to happen the next time price touches the area? Is someone stepping in to buy or sell at this point? Or perharps the first touch dried the liquidity, and there is nothing preventing price from going up again?? Lets see a real example of a trade I took today on GBPUSD, where I analyze step by step the balance and imbalance of the market liquidity in real time at those levels. The only way to see this is usingfutures. Because forex is a decentralized market and blah blah blah, and futures are centralized so you can see the volume, the limit orders through the DOM and blah blah blah.... So first things first, read well this articule : https://optimusfutures.com/tradeblog/archives/order-flow-trading Understand well what is said there. Take it easy. Take your time. And then come back to me. If you have followed my work, you know how I like to ride the market. I want a retracement on the most liquid moment in the market - the NY-London Overlap, and I need a daily BIAS on the pair. For today, I'm bullish on the GBPUSD. So lets check the pics. https://imgur.com/a/kgev9lT The areas you see marked on the 30 min charts are based on the price relationships that happened last Friday. As you can see, those areas are always in a place where price stalled, retraced, pushed through,came back to the area and reacted in some way. Are those black magic? Why price reacts so smoothly today on them? Ah you Criptochihuahua, this is 20/20 insight, you are lying.... Those points are marked before today's open, simply because of the price relationship I described earlier. And if you remember the earlier rant, price stalls in there because sellers or buyers were present. So I would expect that the levels are still interesting, and we should be watching carefully how price reacts in real time. Now, today I got at 1.2680 and got out at 1.2725. Let's check the 2nd pic, keep following the narrative with your own charts. What you are seeing is the first touch at the big figure with the total volume chart, and the bid/ask order flow chart. You can see how the price is pulled toward that level through the exhaustion of offers being filled. You can see how exactly they are depleted at 15:51. Why? Because at the next min, you can see how there are no offers being filled, compared to the bids. Remember, when offers are getting filled , price pulls up. When the bids are predominantly being filled, price is pulled down. And also take a look on the volume. This is key. If an imbalance is to happen, is because there should be a huge difference between bids and asks. Good volume on such a level, good sign. Price hugging the level without good volume, the level will most likely be broken. Look at the next pic. See the price behavior in combination with the volume? Price is hugging the level on low volume. Great signal. That means the level is not that greatly defended, at this point. What are we looking for? We are looking for the bids to be exhausted at our next level with a good volume reaction. Watch what happens. Next pic is our retracement , and we are watching carefully. And look at that beauty. Do you see the volume? Do you see the bids exhaustion? Do you see how the market orders are getting absorbed by the limit orders at that point? Someone does not want the price to go down. Price jumps as a result. It does not huge the level. Do you see? I'm all in, I want to take part of this trade. But wait, there is more.... look at the next pic, because you yet have another opportunity to get into this train.... at 17:23.. Even a bigger reaction, while on the other side.... we got more hugging... No more pics for today. You see what happens next. The level gets broken and price rallies to take the previous day high. Trade was a success. So I hope this added some value, and explained why drawing lines is useful, and how levels are indeed defended. P.S - I lied: Extra Pic, you got a VWAP chart with Standard Deviations. You can see how the pullback nicely fits in our long framework as well and adds confluence to the trade. Research about this :)
So, today the NASDAQ rallied rapidly at the close. Some of my (way out of the money) calls became in the money. My broker auto-exercised the calls and now I have shares that were bought heading towards the top of the rally. I would like to hedge that position by putting something into forex since NASDAQ is closed on the weekend. Only problem is, I don’t know sh*t about forex. How can one hedge? What currency pair would reflect the rally today? It seems EUUSD had an overall down day while NASDAQ had an up day. I’m thinking that if I invest in EUUSD it can hedge me but I’d need to be sure I’m investing in the right direction. Any other ideas or instruments welcome, just want to bet on an instrument that has an inverse relationship with the NASDAQ volatility, if that makes sense. Do I sound like I’m 5? Please help.
What are the 8 Major Currency Pairs? We will now take a quick look at some of the most traded currencies, and for the sake of this article, each will get abbreviated with a series of pair nicknames.Let’s now examine what each has in store as well as what makes specific relationships significant in terms of Forex trading. Currency pair correlations. 8. Sessions & Currency Pairs. 3. Currency pair correlations. Understanding price relationships between various currency pairs allows you to get a deeper insight on how to develop high probability Setups. Awareness of currency correlation can help to reduce risk, improve hedging and diversify trading instruments. In this lesson we will introduce you to using ... The smallest change in the price of a currency pair is called a pip, which reflects a 0.0001 change in price for currency pairs quoted using five digits after the decimal and a 0.01 change in price for currency pairs quoted using three digits after the decimal (currency pair prices are displayed in one of those two ways). It is important to know when conducting forex trading that changes in ... Alright, so we’ve breezed through several terms and concepts when it comes to trading Forex currency pairs. At this point, you should have a firm understanding of what a currency pair is as well as the dynamics of buying and selling. If not, feel free to review the material above as many times as necessary before moving on. Learn about the major currency pairs in the forex market and how to start trading them. View the top currency pairs list and live forex pair prices. How to trade on forex pair correlations. You can trade on forex pair correlations by identifying which currency pairs have a positive or negative correlation to each other. In the conventional sense, you would open two of the same positions if the correlation was positive, or two opposing positions if the correlation was negative. Currency Pair Correlations - Forex Trading Understanding price relationships between various currency pairs allows you to get a more in-depth look at how to develop high-probability Forex trading strategies. Awareness of currency correlation can help to reduce risk, improve hedging, and diversify trading instruments. In this article, we will introduce you to Forex trading using intermarket ...
Trading Co-related Pairs To try out the Autotrader (Robots) mentioned in the video, connect with me on the Telegram channel using the link below: https://t.m... Forex Currencies: The Four Major Pairs forex currency pairs list forex major pairs list how many currency pairs are there currency pairs correlation currency pair convention base currency ... http://goo.gl/bRKoqt - Click the link to open a free eToro Forex account. Currency Pairs What are currency pairs? In the foreign exchange market, currency is... This video deals with the foundational element of Forex trading - the currency pair. As we have covered in previous videos, all currencies are priced with re... In this video we will cover what are currency pairs and their relations. To learn more and get a free trading strategy, visit: https://www.tradeology.com/yt-macd.php.