Discussing the article: "Formulating Dynamic Multi-Pair EA (Part 1): Currency Correlation and Inverse Correlation"
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Check out the new article: Formulating Dynamic Multi-Pair EA (Part 1): Currency Correlation and Inverse Correlation.
Dynamic multi pair Expert Advisor leverages both on correlation and inverse correlation strategies to optimize trading performance. By analyzing real-time market data, it identifies and exploits the relationship between currency pairs.
In trading, correlation refers to the relationship between the price movements of different currency pairs. When two currency pairs are positively correlated, they tend to move in the same direction. For example, GBPUSD and EURUSD are often positively correlated, meaning that when GBPUSD rallies, EURUSD also tends to rally. This is because both pairs share the USD as the quote currency, and any broad weakness or strength in the USD will likely impact both pairs in the same way.
On the other hand, inverse correlation exit when two currency pairs move in opposite directions. A classic example is the relationship between GBPUSD and USDCAD. When GBPUSD moves up (Bullish), USDCAD often moves down (bearish). This happens because in the first pair (GBPUSD), the USD is the quote currency, while in the second pair (USDCAD), the USD is the base currency. As the USD weakens, GBPUSD rises, while USDCAD tends to fall.
We will formulate dynamic multi pair EA to handle multiple currency pairs simultaneously. The system will provide flexibility by enabling you to input, change and modify currency pairs according to your trading strategy. A key feature of this system is its ability to define a primary or "main" currency pair, which acts as a signal provider for other currency pairs.
Author: Hlomohang John Borotho