Professional traders know that there are a lot of factors to consider when it comes to building a thorough trading strategy. One of these factors is the degree of correlation between various currencies. Today we are looking into some of the most popular currency pair correlation trading strategies and how to effectively apply them. 

Correlation of currency pairs can play a great role in building an effective strategy. Traditionally traders look to double their profits by operating with strongly correlated pairs. However, the non correlated Forex pairs that move in complete disagreement with each other are also worthy of your consideration. Here’s why. 

Understanding correlations is a great way for traders to form opinions on markets that they may previously not follow. The idea of a correlation is to take two seemingly different markets or assets and see how market price moves relative to each other. Even though gold is no longer used as a primary form of currency in developed nations, it continues to have a strong impact on the value of those currencies.

All the financial instruments, including currencies move based on certain behavioral patterns, which may differ from one to another. Currencies are always quoted in pairs, one currency value against another. Currency correlation happens when the price of two or more currency pairs moves in conjunction with one another.