Correlation Forex Indicator (MT4)

About the Indicator

The Correlation Forex Indicator for MT4 helps you visualize how currency pairs move in relation to each other across selected timeframes.

By highlighting positive and negative relationships, it guides you to avoid doubling risk on highly correlated pairs and to spot opportunities when normally aligned
pairs diverge.

Use it to confirm signals from your main setup, hedge exposure, or pick the cleaner pair when two look similar.

With threshold filters and alerts, this tool turns raw correlation math into clear, actionable insights for day traders and swing traders alike.

Free Download

Download the “correlation.mq4” indicator for MT4

Indicator Example Chart (EUR/USD H1)

The example chart below displays the Correlation MT4 indicator in action on the trading chart.

How To Trade Using This Indicator

Entry Logic

Start with your primary strategy (price action, trend + oscillator, etc.).

Before pulling the trigger, check the correlation matrix: if your target pair is highly positively correlated (≥ +0.80) to another open position, consider reducing size or skipping to avoid overexposure.

If your setup appears on two pairs but one shows a cleaner/stronger trend while both are positively correlated, prioritize the cleaner chart.

Buy & Sell

For divergence ideas, watch normally correlated pairs (e.g., +0.80) that suddenly drop to neutral or negative.

When your system gives a long on Pair A but Pair B (usually aligned) lags or turns, take the signal on the pair that aligns best with your overall bias and has better structure.

Stop Loss & Take Profit

Place stops based on your main system (e.g., recent swing, ATR). Manage take profit in context: if you already hold a correlated trade, tighten stops or scale out earlier to cap compound risk.

For divergence trades, target the re-alignment move; partial TP at 1R and trail the rest using structure or ATR.

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Download the “correlation.mq4” indicator for Metatrader 4

Correlation Forex Indicator + Forex Sunrise MT4 Strategy

This strategy combines the Correlation Forex Indicator (MT4), which displays the correlation trading algorithm directly on the chart.

This helps traders understand the relationship between currency pairs, providing insight into potential market movements based on the strength of correlation.

It also uses the Forex Sunrise Metatrader 4 Indicator, a trend-following signal tool that provides clear and easy-to-read buy and sell signals.

This combination makes the strategy accessible even to beginners, while providing reliable trend confirmation for more experienced traders.

Buy Entry Rules

• Correlation Confirmation: Ensure the correlation value is above 0.8, indicating a strong positive correlation between selected currency pairs.
• Forex Sunrise Signal: Wait for the Forex Sunrise dotted signal line to change from red to blue, indicating a potential upward trend.
• Entry Point: Enter a long position when both conditions align, confirming a strong buy signal.
• Stop Loss: Place a stop loss just below the blue dotted signal line to manage risk effectively.
• Take Profit: Set a take profit target based on a risk-to-reward ratio of at least 1:2.

Sell Entry Rules

• Correlation Confirmation: Ensure the correlation value is below -0.8, indicating a strong negative correlation between selected currency pairs.
• Forex Sunrise Signal: Wait for the Forex Sunrise dotted signal line to change from blue to red, indicating a potential downward trend.
• Entry Point: Enter a short position when both conditions align, confirming a strong sell signal.
• Stop Loss: Place a stop loss just above the red dotted signal line to manage risk effectively.
• Take Profit: Set a take profit target based on a risk-to-reward ratio of at least 1:2.

Trader Case Studies

Below are examples of traders from Portugal, Germany, and the Netherlands who applied this strategy on various currency pairs and timeframes:

Disclaimer: These case studies are for educational purposes only. Results may vary based on market conditions, risk management, and individual trading discipline.

Advantages

• Comprehensive Analysis: The Correlation Forex Indicator provides insights into market correlations, aiding in informed decision-making.
• Clear Entry Signals: The Forex Sunrise Indicator offers straightforward buy and sell signals, simplifying trade execution.
• Versatility: Suitable for various trading styles, including scalping, day trading, and swing trading.

Drawbacks

• Lagging Indicators: Both indicators are based on historical price data, which may result in delayed signals.
• False Signals: In choppy or sideways markets, the indicators may produce false signals.
• Requires Patience: Traders must wait for both conditions to align, which may lead to fewer trade opportunities.

Strategy Conclusion and Tips

This strategy offers a balanced approach by combining correlation analysis with clear buy/sell entry signals.

For optimal results:

• Backtest: Test the strategy on historical data to understand its performance.
• Risk Management: Always use proper risk management techniques to protect your capital.
• Stay Informed: Be aware of major economic events that may impact the markets.

By adhering to these guidelines, traders can enhance their decision-making process and improve their trading outcomes.

Indicator Specifications

Final Words

Enhancing Results with the Strategy on This Page

The Correlation Forex Indicator is best used as a risk filter and confirmation layer.

Before entering, check whether you’re stacking exposure across highly correlated pairs; if so, reduce position size or pick the pair with the cleaner trend and structure.

For divergence ideas, monitor pairs that usually track together but temporarily decouple—then use your primary system to time the reversion.

Combine with an ATR-based stop and a trailing exit to lock in gains while maintaining flexibility.

Consistency comes from aligning a solid entry method with smart portfolio-level risk control—and correlation awareness gives you that edge.