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Correlation

In one line: How much two markets tend to move together.
Watch: What to Do When Three Trades Are One Risk: Pick One Setup · open on YouTube · 1-minute Short

If two markets usually move together, two trades in them can behave like one bigger trade. Your real risk is then larger than each trade looks on its own.

Correlations change, especially in a crisis. Measured on the past, they describe the past.

Related

Sources & studies

  1. Investopedia (secondary): Correlation

Risk and position sizingPosition sizingRisk per trade

Last checked: 2026-11-04 · Educational, not financial advice.

Education only, not financial advice. No signals. Backtests are hypothetical: real trading can be worse. Past results don't predict future results.