Importance of congruences currency-pairs to oil, SP500, DAX

I`ve learned in a webinar from a forex signal service (probably more an advertising speech) that the trader looks at a number of indices (is that the correct term for S&P 500, Dax, FTSE, Dow Jones, Nikkei?) and oil and then in a second step looks at the charts of currency pairs to select the ones to trade for the day that have a similar price development with I think 2 or 3 of those indices (or oil).
Source of this hint/tip/technique is London Forex Broadsheet (thelfb-forex.com).
This is a video by the LFB trader explaining correlations of equities and USD TheLFB Trader Advantage- Correlated Markets - ForexTV.com

Sounds plausible to me. Do you find this important?

Where do I get those charts from? …and I am thinking of both historic chart data because I need to backtest/paper trade first and also realtime data when I move to a demo account.
Would be 15min. “old” data or end of day of these reference-charts be good enough for intraday trading Forex?

Oil: I think there are various “brands” of oil on the market, right? Which one would I look at? Are they all priced more or less the same?

Yes, looking at index charts and commodity charts (oil,gold) can be very useful to traders, myself included.

Understanding correlation between different types of markets and how that correlation can change over time can be very useful.

Look for a free MT4 demo download from a broker that offers stock and commodities trading and there you will find the charts your looking for.

As a starter try ODL Markets, they supply most of what you want.

Hello,

Well it’s TRUE but how IMPORTANT it is is questionable in my opinion. Put it another way and as an example: EUR/JPY is HIGHLY correlated to the equities market (inidices). In order to use one to ‘predict’ the price movement of the other STILL requires a decent technical trading system or a solid understanding of the fundamentals of either. There is just not enough ‘lag’ nowadays between instruments to be able to use one instrument to ‘predict’ the movement of the other. And the same applies to the ‘commdolls’ or ‘commodity dollars’ (CAD, AUD, ZAR, etc.). In my opinion the best one could do is look to the commodity for a top or bottom and that COULD give you and ‘edge’ on the upcoming movement of the ‘commdoll’. As an example: if you ‘believe’ that Gold has topped out at this time then one could look at shorting AUD/USD or going long USD/ZAR (but of course the value, of LACK of value, of the USD is playing a big part in the movement of these pairs at the moment).

To answer your question about Oil: West Texas Intermediate (WTI) is the ‘de facto standard’ for Oil prices as far as I know (and it’s traded on the NYMEX). But unless it’s an ETF that you’re looking at: the price movements are almost identical ‘across the board’ although the prices themselves will differ.

Regards,

Dale.

By the way and on the subject of currency correlations here is a link to a FINE REALTIME indication of currency correlations if this is your ‘thing’:

Currency Relation | Currency Pairs | Forex Instruments

(And NO: I’m not ‘advertising’ i.e. it’s a useful tool for forex traders no matter WHICH broker you trade with so PUH-LEASE don’t delete my post)!!! LOL!!!

Regards,

Dale.

Thank you. I will try an ODL demo account.
Do you also have an idea where I can get history data so I can backtest? That would be more important at the moment.

So I would probably use it the in the same way as the trader does in the video linked to in my original posting:
He uses the correlation as stop sign so he does not take a trade if the correlation is against it despite other indicators would suggest to take the trade.
?

Have a look here: Forex Data Feeds | Live & Historical

Can’t really advise you to follow him as I don’t know enough about his strategy, that’s something you’ll have to test yourself.

The majority of currency movements are economically generated that’s to say they involve business getting on with business. I personally think it wise to keep an eye on these other important markets as part of your trader awareness of the business picture. Whether or not you can successfully integrate that knowledge into your own trading is another story.

I’m a technical trader but I watch correlation between currencies, and currencies and other markets to try and better my understanding of that bigger business picture.

odl = fxcm.

I know they bought ODL.

I use Mataf for correlations between currencies, gold and silver but does anyone know where you can get updated correlations for currencies with stocks and oil?

As for getting charts ODL doesn’t seem to have everything anymore. I use forex-metal.com. You can get a MT4 demo with all the charts.

Have a look in the Babypips school in the “Sophomore Year”, some interesting info there for you.

The problem you are going to have is that these correlations change all the time. A couple of years ago it was different to now…the correlations can also adjust slightly over time.
USDCAD is a good one…inverse to oil.

If you want to get an understanding of this you’re going to have to read but there are endless correlations: bonds vs equities, gold vs FTSE (less so recently), gold vs AUD and NZD, AUDJPY vs S&P500, etc etc.

A trader I pay particular attention to (because of his gains) said that indices (Dax, Dow…) are very important.

Would you agree?

Also would I look at the indices or their futures? Dax or Dax Future? Nikkei or Nikkei Future?

This is true. That is why I’m looking for something like Mataf so I can get up to date correlations besides the currencies and gold and silver.

Yes and also because of their relation to their currencies. At present the correlation is very simple, dollar down, Dow/SNP up.
You could probably monitor something like the DAX against the euro but the european stock markets are very closely tied to the US market also so it’s less clear cut but the reason for DAX being important is Germany’s industrial health.

There are other things you can play like the gold/silver ratio and the gold oil ratio, etc. I haven;t read it yet but have a look at Ashraf Laidi Intermarket Analysis book - he’s a good analyst, doubt he’s a very good trader mind given some of his calls :slight_smile:
Mataf?

Thanks, I’ll check out that book.

Mataf gives you up to date correlations between all currencies plus gold and silver. I would like to find something similar for correlations of currencies and equities, oil, etc.

Forex Correlation - Mataf.net

Why not do it yourself?
Look into using the RSI tool to do this on something like freestockcharts…or you could program something in MT4 to track it for you or do an overlay of charts.