I know that many buyers observe correlations as in the event that they had been gospel. However, do
I know that many buyers observe correlations as in the event that they had been gospel. However, do they actually perceive what a correlation represents?
You see, markets usually are not linear in nature. Whereas two totally different markets could also be touring in the identical route for a time frame, except you perceive every chart by itself, how will you ever know when a seeming correlation will break? And, if you happen to assume that they are going to align indefinitely, how lengthy does it take so that you can minimize your losses in figuring out {that a} seeming correlation has damaged?
Bear in mind, when you find yourself following a correlation, all you might be doing is assuming a relationship will proceed indefinitely in a linear method, even supposing markets are merely not linear in nature.
For example, again in 2016, I started warning the members of Elliottwavetrader that there are numerous effectively adopted correlations which can be setting as much as break down. And, I primarily based this upon the underlying charts we had been monitoring throughout the markets.
Then in January of…