Hey fellow millionaires. I need your advice on how I should deal with currency correlation it’s making me miss out on some profitable trade setup
correlation can be a double-edged sword - it amplifies your gains when the market does what you think it should, but amplifies your losses when it doesn’t.
But this is a big subject - in more precise terms please, what is the problem?
I trade price action strategy particularly pin bar and engulfing bar, some times when I see setup in some instrument I will not be able to take if because of correlation and the setup may turn out to be a winner
That can be a problem.
I suppose you could reduce the size of your individual positions, this might enable you to take more than one trade. For example this week I took several positions simultaneously which were short JPY: JPY was so negative that it was worth the risk of the increased exposure, but I also did not know which JPY pair would be the best, so I took several with small position sizes.
This worked out very well but it is better if possible to apply more TA to the charts so that you only need to take the very best trades. Which is best depends on your strategy, and also on your temperament - some traders can accept a low win rate as long as they benefit from some very big individual winners: others want a steady stream of wins so are happy to accept smaller gains per trade.
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It good learning what’s correlated IE currencies,indices gold ect but working a strategy around this I’m sure if it was easy it be well known and we all be wealthy ,
Kudos to you.
It seems am interested in that your strategy, how do you get to know JPY will perform poorly this week?
There’s a range of valid ways to check the strength of a currency. You could look at recent percentage price change - up is bullish for the base currency, bearish for the counter currency. Or look at price compared to a moving average - above is bullish for the base currency and bearish for the counter currency.
Looking at the 7 pairs for each major currency you can see that each currency can have at most 7 bullish charts and no bearish (7-0) or at worst 7 bearish charts and no bullish (0-7). Or some score in between. JPY has been 0-7 for a long time.
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Hi I’m from UK ,it’s abit like looking at BBC weather forecast for the week .They might say sunny intervals Wednesday but it might be dull and overcast you can never be too sure.
I was long Japan against euro beginning of conflict for a some winning trades, then heard negative news how it would effect their economy, there was a big spike on the charts and reversal so I went short .I have left the Japanese pair s for a few weeks though
the understanding correlation will help you makes a better decision when putting down your trade. However, they are easily influenced by economic news so you will need to do a fundamental analysis.
If I understand correctly eg. you are in long EURUSD, but you see bullish pin bar on USDJPY and you won’t take it due to some EURUSD/USDJPY correlation?
I don’t handle it at all. If my strategy tells me it’s buy time - I buy 
Good money management should take care of such situations. But if the case is, that you see few correlated signals at the same time (no position open earlier) - then I would just take the trade from strongest signal - largest pin bar, most sticking out, near important levels, maybe with some strong oscillator (RSI, Stochastic, whatever), in direction of trend etc.