trading multiple currency pairs

This is a discussion on trading multiple currency pairs within the Forex forums, part of the Markets category; My opinion is that it would be better to simply increase the lot size on one pair if you want ...

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Old Jun 11, 2013, 7:47pm   #1
 
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trading multiple currency pairs

My opinion is that it would be better to simply increase the lot size on one pair if you want to increase profit. Since it would seem that if pairs are moving in the same direction or opposite, then trading them at the same time is increasing your risk, or limiting your profit on the trade that is a winner.

I've heard some trade multiple pairs as a sort of "hedging" method. At any rate, I'd be interested to hear from anyone who is consistently profitable trading multiple pairs at the same time, and why you think it is better than just trading one pair at a time.
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Old Jun 11, 2013, 9:45pm   #2
 
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Re: trading multiple currency pairs

Quote:
Originally Posted by aliasentric View Post
My opinion is that it would be better to simply increase the lot size on one pair if you want to increase profit. Since it would seem that if pairs are moving in the same direction or opposite, then trading them at the same time is increasing your risk, or limiting your profit on the trade that is a winner.

I've heard some trade multiple pairs as a sort of "hedging" method. At any rate, I'd be interested to hear from anyone who is consistently profitable trading multiple pairs at the same time, and why you think it is better than just trading one pair at a time.
I do it all the time... Your logic is somewhat flawed.
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Old Jun 11, 2013, 10:11pm   #3
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Re: trading multiple currency pairs

yay! martinghoul is back!
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Old Jun 12, 2013, 12:52am   #4
 
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Re: trading multiple currency pairs

alisentric i'm no expert but here's what I do. I trade two portfolios, one systematically and one by discretion. By discretion, I mean its traded based on my global macro views thus I use many different pairs, from G10 to EM currencies. Anyhow, many of the pairs were correlated.

For instance last year, the risk-on/risk-off phenomenon was still strong - on risk on days you'll see all the risky currencies appreciating e.g. EM currencies, Eur etc. and vice-versa on risk averse days.
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Old Jun 12, 2013, 1:07am   #5
 
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Re: trading multiple currency pairs

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Originally Posted by Martinghoul View Post
I do it all the time... Your logic is somewhat flawed.
I do know that most currency pairs are correlated in some way with other pairs, either move in the same direction or opposite direction. Virtually every time I've traded in more than one pair at the same time, I noticed that the second pair either moved in the same direction, or opposite direction of my first pair.

I assume you are consistently profitable? Why do you choose to trade multiple pairs verses just one at a time? What advantage do you think that gives you?
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Old Jun 12, 2013, 1:10am   #6
 
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Re: trading multiple currency pairs

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Originally Posted by $oro$ View Post
alisentric i'm no expert but here's what I do. I trade two portfolios, one systematically and one by discretion. By discretion, I mean its traded based on my global macro views thus I use many different pairs, from G10 to EM currencies. Anyhow, many of the pairs were correlated.

For instance last year, the risk-on/risk-off phenomenon was still strong - on risk on days you'll see all the risky currencies appreciating e.g. EM currencies, Eur etc. and vice-versa on risk averse days.
So, you are in multiple trades at the same time, then?
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Old Jun 12, 2013, 1:30am   #7
 
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Re: trading multiple currency pairs

aliasentric started this thread Because I like to keep things simple, one pair at a time works for me. Since i don't have to worry about any correlation with other pairs. I do know it also depends on what time frame you are looking at as some time frames the correlation is stronger than in other time frames.

At any rate, trading is pretty complicated, and I try to simplify wherever I can, and trading one pair at a time works for me. But I'm curious as to what advantage some think they get by entering multiple trades at a time, aside from the adrenaline rush
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Old Jun 12, 2013, 2:53am   #8
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Re: trading multiple currency pairs

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Originally Posted by aliasentric View Post
Because I like to keep things simple, one pair at a time works for me. Since i don't have to worry about any correlation with other pairs. I do know it also depends on what time frame you are looking at as some time frames the correlation is stronger than in other time frames.

At any rate, trading is pretty complicated, and I try to simplify wherever I can, and trading one pair at a time works for me. But I'm curious as to what advantage some think they get by entering multiple trades at a time, aside from the adrenaline rush
OK lets just nip this in the bud.

You say "one pair at a time works for me"
One pair in forex eg eurjpy, this means you are trading two currencies Euro and Yen. How do you filter which pairs to trade at any one time? If you pick pairs at random or because they are your favorites etc etc , they might not be the correct pairings to trade at that time.So, you very much do have to worry about correlation.

Lets take 6 of the most popular currencies and pair them off giving 15 cross permutations and 2 directions (long/short) 15x2=30.

Now, I respectfully submit that you have a 1 in 30 chance of being on the correct pair and in the correct direction at any given moment in time. The chances of being successful over a decent sample size are nigh on zero. Hopefully you can now see why that is the case.
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Old Jun 12, 2013, 2:59am   #9
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Re: trading multiple currency pairs

You have a pot of money in one currency, say USD.

You thing that other currencies are going appreciate more than USD.

You sell some USD and buy these currencies.

You think that other currencies are going to depreciate more than USD.

You borrow these currencies and swap them for USD.
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Old Jun 12, 2013, 3:18am   #10
 
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Re: trading multiple currency pairs

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Originally Posted by counter_violent View Post
OK lets just nip this in the bud.

You say "one pair at a time works for me"
One pair in forex eg eurjpy, this means you are trading two currencies Euro and Yen. How do you filter which pairs to trade at any one time? If you pick pairs at random or because they are your favorites etc etc , they might not be the correct pairings to trade at that time.So, you very much do have to worry about correlation.

Lets take 6 of the most popular currencies and pair them off giving 15 cross permutations and 2 directions (long/short) 15x2=30.

Now, I respectfully submit that you have a 1 in 30 chance of being on the correct pair and in the correct direction at any given moment in time. The chances of being successful over a decent sample size are nigh on zero. Hopefully you can now see why that is the case.
I agree with what you say, but don't see how it answers my question. I trade one pair at a time, so if I enter a trade in EUR/USD, I don't open another trade until I see this trade to fruition. I don't have to worry about correlation between pairs, if I trade only one pair at a time. Many people enter more than one trade at a time. I simply would like to know what advantage they think that gives them.
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