Currency correlation
Correlation shows how much the prices of two assets move together. If they usually rise and fall in sync, correlation is positive. If one rises while the other falls, it is negative. It is measured from −1 to +1.
For a trader this is about risk. Two trades on correlated pairs can behave like one big position.
Example
You bought EUR/USD and GBP/USD and think you opened two different trades. Both depend on the dollar and often move together, so in risk terms it is almost one position, doubled. Count the risk on both at once.
What not to do
Do not treat correlation as constant: it changes over time and can vanish exactly in stress. Do not stack many similar positions and call it diversification.
WEEX
FxPro
Vantage