Intermarket correlation.
What is that? How does that help us and what can we do about it?
Well, those seeking answer shall find them!
It is no secret to us especially seeing how we are all traders here that all of the assets and all of the segments of the market are intertwined with each other. And the more connections we know. The better our trading will be as by looking at one asset we are going to be able to tell what can possibly happen with another asset.
EXAMPLE!
The most prominent example of intermarket correlation is the relationship between gold and USD. When one goes up, that means that the other one is going to go down and vice versa. This in fact can be really helpful because knowing the correlation between the movements gold and USD-driven couple we can see the movement of one chart by not even having to look at it.
And that is exactly how that helps us. In case you have several brokers and several accounts knowledge that USD/JPY went up gives you the full right to assume that gold is going down. And while you can BUY your currency couple with one of your broker, you can SELL gold with another.
In the end this possibility is going to double your profits and double your success through trading day.
Of course there is no point in forgetting about your trading signals either. But this little trick is giving you the possibility to make at least some decision all on your own.
What can we do about it?
Well, what can we do about the ways markets are operating? That’s right – nothing. We can do exactly nothing with intermarket correlation other than to put it down for our profits. It is just the way market relations have formed over the years. That is just it.
