Taking Into Consideration Equities

If you are discussing trading the currency markets without taking into consideration equities than you are just leaving outside of the equation one major factor out there that influences a way a currency pair moves. This is valid especially in a risk-denominated pairs, like the eurusd is in our days, and this means it is unlikely, not impossible, unlikely, that the eurusd moves in one direction and equities in the other for a long period of time, a certain degree of correlation being betweem the two. This is the case today, but I remember back in time when the corelation between the usdjpy and DJIA (Dow Jones Industrial Average) was so tight, they efectively move in a concertated way, something like one point higher on the DJIA was meaning exactly one pip higher on the usdjpy. And this correlation went for many year, until eventually it was broken.

What I suggest that every trader should do is to look at equities all the time and treat them with respect. Look for the time equities open all over the world, starting with the Asian session, going into London and ending with the North American session. Those times are related to the flows that go in/out of equities and that affects strongly the flows that are being poured in/out of a currency pair. Keep in mind we are living in a trading world dominated by complex trading algorithms, high frequency trading machines, that are being set to trade when specific conditions are being met at a certain point in time. So if the algos go and buy US equity indices for the close of the North American session, for example, this will make the eurusd currency pair move up, or at least stop falling and starting to consolidate, to give you just an example.

The recording that goes with this sub-chapter talks about all of the above and shows you where to found the equity charts on the Metatrader platform, and, if not available there, where online should you look for them.