Relations between forex and stock markets

Relations between forex and stock markets

Forex and stocks – this is an intermarket correlation that we have been anticipating to talk about for a long time as these two have always been standing together. Two of the most popular asset groups are bound to be tied together and we are to learn in what way we can profit off studying both of them and their relations between each other.

So. Which one is the most important? Stocks or forex?

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Well, that is the everlasting question. The basic rule is as follows: when national stocks of a particular country rise, the confidence in the strength of the national currency rises just as well as the demand for that vey national currency. And demanded currency tends to rise against all of the other foreign currency in the international market.

And of course vice versa – weak stock market makes national currency fall which leads to the poor performance in the forex market.

The only problem here is that there is no way to say whether the correlation between the national currency and the stock market is negative or positive, e.g. whether they move together in one direction or in the opposite directions.

In order to understand the connection between the two markets we are going to have to look at every currency couple and every stock index separately. The only thing that can make the process of making this whole thing out is the fact that world stock markets in the world usually move in the same direction. The only thing for us left to do is to apply all that we have ever learned to analyze of every chart compared to each other. Only then we are going to make sense of the nature of forex-stocks relationship.  

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