MT4 Correlation Meta trader indicator for your mt4 platform. This indicator shows the moves of the two assets or currency pairs likewise in similar direction, in opposite directions to each other and or in a way that are absolutely transform when compared to either currency or assets.
The Currency Pair Correlation Indicator can easily spot price difference in same market or different markets and help the trader can put money into on buying one of the currencies or selling the other currency within a shorter swing because and make profit in the start of trade before price turn to normal.
Characteristics of Correlation Indicator:
Platform: Meta trader 4
Time frame: M1, M5, M15 etc. Even smaller times are important.
Assests: Currency pairs depending on direction.
Pairs that tend to move in the opposite way are:
- AUD/USD and USD/JPY
- EUR/USD and USD/CHF
- GBP/USD and USD/JPY
- AUD/USD and USD/CAD
Pairs that tend to move in the same way are:
- AUD/USD and GBP/USD
- AUD/USD and EUR/USD
- EUR/USD and NZD/USD
- USD/CHF and USD/JPY
How to use Correlation Indicator Meta Trader 4 let’s understand some settings:
Settings that is used in correlation trading.
- Sub Symbol: This is the laminate symbol that are more important for trade.
- Bull Bar Colour: Choose the colour of bullish or upward candles usually green.
- Bear Bar Colour: Choose the colour of bearish or downward candles usually red.
- Grid Colour: Colour of the price Grid and symbols of the laminate
- Mirroring:The option to reverse the chosen pair of currency. Make easier for trader to determine the inverse relationship of different assets within same market or different
- Correlation matrix: depends on candles(10, 20, 70, etc.)
- Trends: single or multiple trends.
Benefits of Correlation Indicators:
- It helps to indicate divergence between two different currencies and traders can easily put money in one currency and sell the other currency.
- Helps to identify opportunity between two different currencies by identifying the change in prices.
- It is uses to analyse the change in market trend and take advantage of different price in market.
- It is simples and easier for trader but they have to be careful while the price moves rapidly from diverse to normal direction.
- This indicator does not include other indicator for analysing market trends individual enough.
- This indicator is developed on mechanism that is suitable for two different assets and their correspondence
Consider two currency pairs EUR / USD and GBP / USD and analyse their movement if they are likely to move in opposite way this time of trade considered to be profit taking period for traders.
Demerits of correlation indicator:
- This indicator does not consider every move and there will be some fake moves caught so traders must be care full to recognize exit time.
- Some traders find helpful adding another indicator like trend following with this.
- Sometimes it does not work for every trader and sometimes enough for some trader it literally depends on their practice and understandings.