Correlation Squeeze

Correlation Squeeze is an expert advisor for MetaTrader 5 that trades the relationship between two currency pairs which usually move in a similar way. When the distance between them grows beyond a set level, it opens positions on both symbols, with the aim of profiting as the gap narrows again.

How it works

The idea behind the EA is simple. Two correlated pairs tend to travel together, but now and then one pulls away from the other. The EA measures that separation and waits until it is wide enough to count as an opportunity. It then places trades on both symbols, one on each side of the spread, and manages them as the pairs move back toward each other.

The approach described for this tool is to keep both legs open until the position as a whole reaches profit. That can mean holding trades for some time, so you should understand how long exposure and floating losses fit with your account size.

Markets and timeframes

The EA is aimed at forex pairs that show a clear correlation. You can attach it to the chart of one symbol and either trade that symbol or choose another in the inputs. The developer suggests the H4 timeframe and an account balance of about 500 to 1000 USD. These are guidelines, not rules, and you should check them against your own broker conditions.

Settings

The EA comes with a large number of inputs so you can shape your own correlation-based system. The exact names and defaults are shown in the input tab when you attach it, so review each one before trading. Areas you should look at include:

• Which symbol is traded and which is used as the second leg
• How wide the gap must be before a trade is opened
• Lot size and how positions are scaled
• Profit target and any protective limits
• Magic number, so the EA can be told apart from other robots on the account

Only change one group of inputs at a time in the Strategy Tester, so you can see what each change does.

Things to check before going live

1. Both symbols are in Market Watch and have enough price history.
2. Your broker's spreads, swaps and contract sizes for both pairs.
3. Whether your account type allows opposite positions on different symbols.

Risk

Correlation between pairs is not fixed. A gap can widen further, last longer than expected, or reflect a real change in the market. Holding trades until they are in profit can lead to deep drawdown. Use sensible lot sizes and test on a demo account first.

Installation

1. In MetaTrader 5, choose File, then Open Data Folder.
2. Open MQL5, then Experts, and copy the EA file there.
3. Restart the terminal or refresh the Navigator panel.
4. Open a chart of your chosen symbol, set the timeframe, and drag the EA onto it.
5. Enable Algo Trading, check the inputs, and confirm the smiley face appears in the chart corner.