In this article, we will go through the details you need to know about currency correlation forex indicator mt4, and at the end, you can also find the download link.
What is Correlation forex Indicator MT4?
In financial markets, the financial instruments correlate to each other. That means if one of them changes, the other changes in the same direction. So, for example, if we say that GBPUSDUSD and EURUSD correlate, If GBPUSD goes down, EURUSD will also go in a bearish trend. This is called a positive correlation between GBPUSD and EURUSD.
Three types of correlations exist between mt4 currency pairs.
- Positive: If both mt4 currency pairs follow the same trend, they are positively correlated.
- Negative: If both mt4 currency pairs follow the opposite direction, they are negatively correlated.
- Zero: When mt4 currency pairs have no relationship with each other, then they have zero correlation.
The indicator used to find the correlation between two mt4 currencies is the currency correlation indicator for mt4.
Why should you use the currency correlation forex indicator mt4?
Knowing the correlation between two mt4 currency pairs can help you decide your lot sizes for your live trades. For example, if you take trade-in mt4 currency pairs with a negative correlation, the other entry trade will cancel out the good profits even if you win in one trade. And same is the case with positive correlation, where you will be doubling your risk trading in currency pairs that have a positive correlation.
Settings of correlation Indicator MT4:
In the settings of this indicator, we have the following options.
Simbol_Name: The currency pair to which we want to correlate.
Bars_of_autoscale: How many bars to autoscale
Inverse: If set to true, it will flip the chart horizontally
MA: If true, it will display the moving averages for overlaying pair
Period: The period of moving average that you want to use
MA_Only: If true, it will only display the moving average
Working of currency correlation indicator for mt4.
When you apply the correlation indicator to your mt4 charts, you can see the correlated price movement of currency pairs. By visiting the relationship between two pairs, you can make more informed decisions for your trading strategies.
The correlation indicator itself does not produce BUY and Sell signals. Instead, it shows the correlated pair’s price chart and the currency pair you apply the indicator. You will be able to see the price movement of both correlated pairs. After observing the price movement for each pair, you can see if the currency pairs positively or negatively correlated with each other.
A working example of a correlation indicator:
The picture below shows that the USDJPY pair inversely correlates to the GBPUSD pair.
That means when the USDPJPY price goes up; the GBPUSD price goes down.
Currency correlation is an excellent indicator and can allow you to find good market opportunities.