Summary of "🌟Currency Pairs Correlation Indicator for MT4/5 – Free – [TradingFinder]"

Summary

The video presents a free Currency Pairs Correlation Indicator available for download on the TradingFinder website, compatible with MetaTrader 4 and MetaTrader 5 (MT4/MT5) platforms. This indicator is designed for forex traders to analyze the statistical correlation between various currency pairs, helping in risk management and trade decision-making.

Key Features & Usage

Installation

Download the indicator file from TradingFinder.
Load it via the Navigator in MT4/MT5 and drag it onto the chart.
The indicator displays a correlation table on the right side of the chart.

Functionality

Shows positive or negative correlations between a primary reference currency pair and other selected pairs.
Correlations are calculated for multiple timeframes, specifically 1 hour and daily.
Correlation values are displayed numerically and color-coded for easy interpretation.

Symbols & Tickers Mentioned

Common Forex pairs: USD pairs (e.g., EURUSD, GBPUSD, NZDUSD, USDJPY).
Example correlations:
- GBPUSD and NZDUSD show strong positive correlation.
- USDJPY shows a strong negative correlation relative to the primary pair.

Settings and Customization

Users can input up to three specific forex symbols to monitor correlations.
Important to enter symbols exactly as per broker notation (including suffixes if any).
Users can clear default lists and add only preferred symbols.
Adjustable parameters include:
- Correlation calculation period: Longer periods mean delayed but smoother correlation data.
- Update interval: Default is every 30 minutes for recalculating correlation values.
- Correlation sensitivity coefficient (correlation limit):
  - Sets the threshold for highlighting correlations.
  - Values above this threshold are shown in red (strong correlation, positive or negative).
  - Values below threshold appear in green (weaker correlation).
  - Example: Setting the limit at 70 highlights correlations above ±70 in red; increasing to 90 reduces sensitivity and shows more green values.

Interpretation and Trading Implications

Strong correlations (red values) indicate pairs that move closely together or inversely, suggesting it is generally not advisable to trade these pairs simultaneously to avoid correlated risk exposure.
Negative correlations are marked with a minus sign and can be equally important for portfolio diversification or hedging strategies.

Platform Specific Notes

On MT5, the correlated symbols must be open on charts and set to both 1-hour and daily timeframes for accurate calculations.

Methodology / Framework for Using the Indicator

Select primary reference currency pair (e.g., EURUSD).
Input other currency pairs of interest into the indicator settings.
Set correlation calculation period and update frequency as desired.
Adjust correlation limit to define sensitivity for highlighting correlations.
Monitor the correlation table for red (high correlation) and green (low correlation) values.
Use correlation data to avoid simultaneous trading of highly correlated pairs, reducing portfolio risk.