Forex Currency Correlation Strategy: Trading Pairs Together

One of the most underused edges in forex trading is currency correlation. Here's how to use it systematically: **Key correlations:** - EUR/USD and GBP/USD: ~+0.85 (move together) - EUR/USD and USD/CHF: ~-0.90 (move opposite) - AUD/USD and gold: ~+0.70 **Confirmation trades:** If EUR/USD breaks above resistance AND GBP/USD breaks a similar level, the move is more likely legitimate. Two correlated pairs confirming each other = higher probability. **Risk doubling warning:** If you're long EUR/USD AND long GBP/USD, you're essentially double-long EUR vs USD. This doubles your drawdown when the dollar moves against you. **Divergence trades:** When two usually-correlated pairs diverge (one up, one flat), the lagging pair often catches up. This is a statistical edge. Monitor correlations weekly — they shift based on economic cycles. Do you use currency correlations in your trade selection or risk management?