Should we use correlation analysis frequently? When asked, I think it's better not to use it too often, for the following reasons
Correlation
means essentially the opposite-trade of currencies
When the yen rises, the dollar falls
Market movements are driven by such relationships
Even if you increase currencies, you won't gain profits
Rather, you are often clouded by noise due to being misled by correlations
If you try to use this correlation excessively
both the yen and the dollar move in the same direction
This should be used only as an analysis when there is a strong trend
In this case, the market is showing a strong trend
So, regardless of which currency you trade, your performance won't change
Just trade with the trend
This is a method used in trend strength indicators
When multiple currencies are pointing in the same direction, the trend is strong
So you trade in the direction of that trend
Only in such times should you overuse correlation
Normally you should not overuse it, and you should limit the currencies you trade to a certain extent
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