Many currency pairs are correlated with other currency pairs. It is important to understand this concept as it will impact on your risk management with trading. Correlation occurs when two or more different currency pairs tend to move in the same direction within the same trading environment. This would mean that if you traded both of those currencies then your risk would be double for that particular trade in that environment.

Correlation is not permanent or fixed by any means. You do get periods where correlation patterns are tested when there is particular market volatility or during major global economic events.

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