Should You Trade Correlated Forex Pairs?



#371: Should You Trade Correlated Forex Pairs?

In this video:
00:23 – Trading correlated pairs and the TFTC Pattern Trader results update
00:36 – Confusion over trading correlated pairs
01:38 – Other correlated currencies
02:06 – Trading examples
04:27 – Trades from last week and how I traded the correlated pairs
05:52 – TFTC Pattern Trader update, +3.6% this week on autopilot

Should you trade correlated Forex pairs? Let’s talk about that and more right now.

Hey traders, Andrew Mitchem here, at the Forex Trading Coach with video and podcast number 371.

Trading correlated pairs and the TFTC Pattern Trader results update

And I want to talk all about Forex pairs and trading correlated pairs and also, I want to give you an update on the autopilot feature for the trade results this week for our fantastic software called Pattern Trader.

Confusion over trading correlated pairs

So let’s start with the question about Forex pairs and correlation. It came from a trader called Joseph and said to me, “Hey Andrew, I’ve got a question for you. I’m getting confused with knowing which pairs to trade and which are correlated. Can you help me out on a future video and podcast?” So, exactly what we’re doing. You would notice that a lot of currency pairs are quite highly correlated. For example, the Euro and the Swiss Franc are highly correlated. And what the EUR/USD does, the USD/CHF generally does the opposite because they’re both U.S. dollar related and the Euro and the Franc are related. So if the EUR/USD goes up, on your charts, generally, you will see the USD/CHF drop. You get other correlations acting like the Euro and the Pound, both are very similar markets, same time zone, et cetera. They tend to move quite similar, tend to.

Other correlated currencies

You get other correlations such as the commodity currencies. So in other words, the New Zealand dollar, the Australian dollar and the Canadian dollar, they all tend to move in correlation most of the time. And of course you get exceptions to that. And sometimes you’ll get the Aussie dollar move up, as the Kiwi dollar moves down. That’s generally something’s happened, whether it be a news event or something to split that correlation, but overall, you will find similarities there.

Trading examples

And so an example of this would be, let’s say you were trading the EUR/AUD. Now what the EUR/AUD does, let’s say it moves up. You will find that the AUD/CHF will likely go the other way. And so you have correlation there because you’ve got the Australian dollar featuring in both of those. And you’ve got the Euro and the Franc, which are correlated, so that becomes the issue that some traders have.

And with Joseph, who said, he’s confused with these, you can see why, and therefore you just need to be careful. Let’s say you were trading the AUD/USD and that was a buy trade. You probably wouldn’t want to be trading a sell trade at the same time on, let’s say the NZD/USD, because you’re unlikely to find the two would work out. Now, of course, there are exceptions again, you have to trade what you see and you have to have a trade plan in place. So if your plan is to take those two trades, regardless, then you do so. But if they’re on the same time frame chart, and they show at the same time of the day, then its quite likely there that one’s going to work and one, maybe not.

So what you need to do as a trader is you need to do one of few things. You have to look at this and go, do you know what, I’m going to take them both, but I’m going to reduce my risk on each trade. That is one option, or you can look at them and go, I need to take the strongest of these, so if the AUD/USD, let’s say it’s showing a bullish signal and the NZD/USD is showing a bearish signal. What I would then do is go and have a look at the AUD/NZD pair. And on that, you’re likely to see that the AUD/NZD is moving up as well, so that gives you a little bit more bias that you’ve getting this right with strength in the AUD/USD.

But also you then need to look at your strategy and how these are likely to play out. Where are you going to put your stop losses? Where are your profit targets? Where are they bouncing? What part of the chart are they in? All those types of things, and you might then do your analysis and go, do you know what? I’m just going to take one of these because it looks so much better than the other.

Trades from last week and how I traded the correlated pairs

And I’ll give you an example. Last week, I had three Euro related trades at the same time on the daily charts. I had the EUR/NZD, the EUR/JPY and I think it was the EUR/CHF as an example. And so what I did with those, as I said to my clients, I said, all three of these are looking really, really good, they’re on the same time zone, they’re all showing good trades on the daily charts.

So what do we do? We could go and find two nos and go, I’m going to take just the best one. But at the time all three were showing very, very high quality, A grade setups. So I’m happy to take them. It’s just that I know that I’m putting a lot of faith in the Euro moving in my anticipated direction for all three of those trades to work out, which by the way they did. But what I ended up doing is reducing my risk slightly, because I knew that all three were highly dependent on the Euro. So that’s how you can manage that as well. I think the issue that some people have is they see the EUR/USD moving up on lets say, daily timeframe. And then they see the EUR/JPY moving down on a one hour timeframe. And that’s where some of the confusion comes. But you’ve got to make sure that you have your plan in place of when this happens, you know exactly what you are going to do in those scenarios. And so that’s important for you to figure out what works best for you.

TFTC Pattern Trader update, +3.6% this week on autopilot

Now. Part two of the video onto our amazing software called TFTC Pattern Trader, this week right now, as I’m recording this, we’re in Friday morning here in New Zealand, still with most of one day still to go, I’m on 100% autopilot. My account is up another plus 3.6% right now, as I’m talking to you. So Pattern Trader right now has been only made available to my coaching clients. Plus last week’s video and podcast, I announced how you can get to access it yourself, even if you’re a non-client of ours. So in a few weeks time, we are going to be increasing the price for non-clients. We obviously need to look after our coaching clients and keeping the price to a minimum for those people who are already on board with us as coaching clients is going to be paramount for us.

But if you are interested in the software and you want to keep to the low price that’s run right now is like the introductory price, make sure you have a look at I will put a link to that site on this video podcast page. Make sure you have a look at that. You can start it for free. There’s a free trial there with a basic version, but if you’re interested in going to the paid version, where you can trade live onto one of your training MT4 accounts, or have it completely automated, like I trade the software myself, within a couple of weeks the price will be going up.

So there’s a difference between coaching clients and non-clients. So right now take advantage of that lower price. The link will be on here, but like I mentioned again so far this week, plus 3.6% completely 100% auto trade autopilot. I’ve not touched a single trade. So amazing results there, especially when you consider what else is happening in the world of investments right now. So once again, this is Andrew Mitchem, at the Forex Trading Coach. I’ll see you this time next week. Bye for now.

Episode Title: #371: Should You Trade Correlated Forex Pairs?

Signup Below to Access My TFTC Pattern Trader

Click Here to Check my Recommended Brokers.

Learn More About My Course. Click Here!


The 30 Minute Trader Trip

Watch how Andrew made a +12.79% gain on a live account during 4 weeks while trading for just 10-30 minutes a day while on holiday in the UK and France.



Quick Links


About Andrew
About Paul
Cookie Policy


Free eBook
Free Risk Calculator
Are You New to Trading Forex?
Are You About To Give Up Trading?
30 Minute Forex Trader Update
Online forex video course
One on One Coaching in Person
One on One Coaching – Online
© 2020 The Forex Trading Coach Ltd (NZ FSPR:FSP37396) provides general information and educational courses and materials only. This is not an offer to buy/sell financial products. We do not provide personal advice nor do we consider the needs, objectives or circumstances of any individual. Financial products are complex and all entail risk of loss. Over-the-counter derivative and foreign exchange products are considered speculative because they are highly leveraged and carry risk of loss beyond your initial investment, hence should only be traded with capital you can afford to lose. Please ensure you obtain professional advice to ensure trading or investing in any financial products is suitable for your circumstances, and ensure you obtain, read and understand any applicable offer document.

Latest Podcasts / Videos

#377: Will the US Dollar Fall Over the Next 12 Months?

Will the US Dollar Fall Over the Next 12 Months?  Podcast: #377: Will the US Dollar Fall Over the Next 12 Months? In this video: 00:26 – A great question from someone on my webinar 01:12 – Some examples from the last 17 years 02:09 – The EUR/USD got very...

#376: Where to Invest Today?

Where to Invest Today?  Podcast: #376: Where to Invest Today? In this video: 00:24 – My latest bank statement 01:07 – What are your options? 02:06 – Continuing to do what we’ve always done 02:21 – Client from Germany making 2.5% to 4% per week 03:45 – The...

#375: The Power of a Good Trading Community

The Power of a Good Trading Community  Podcast: #375: The Power of a Good Trading Community In this video: 00:27 – Amazing trading results and the power of a good trading community 01:27 – Trading can be a lonely business 02:13 – You get to associate with...

#374: How to Calculate Your Lot Size Correctly & Easily

How to Calculate Your Lot Size Correctly & Easily Podcast: #374: How to Calculate Your Lot Size Correctly & Easily In this video: 00:26 – Understanding Lot Sizes 00:58 – The problem with the way most people trade 01:57 – Different pairs pay a...

#373: I’ll Take You on a Helicopter Trip

I’ll Take You on a Helicopter Trip  Podcast: #373: I’ll Take You on a Helicopter Trip In this video: 00:29 – Let’s go flying but first we need to prepare 02:22 – Pre-flight completed and trading completed 03:36 – Experience some of the amazing...