Please help trading correlated FX Pairs

monkey180

Active member
145 0
Hi there,

I currently trade:

AUC CAD
AUD JPY
AUD USD
CAD CHF
CAD JPY
CHF JPY
EUR CAD
EUR JPY
EUR USD
GBP CHF
GBP JPY
GBP USD
USD CHF
USD JPY


Are any of there correlated and therefore no point in trading the two pairs that are going to move in the same way, and there for not spread risk.

Thanks
 

Rhody Trader

Senior member
2,620 264
Any pairs which share the same currency are going to be correlated. And because of the Swiss National Bank's action vis-a-vis EUR/CHF, the euro and the swissy are quite highly correlated (and generally are positively correlated anyway). The pound and the euro also tend to move in the same direction.
 

monkey180

Active member
145 0
Hi,

Thanks so it I were to make a list of paris to trade, in that list you would only see a currency once.

Thanks
 

Rhody Trader

Senior member
2,620 264
Depends on what you were looking to do. If you want to avoid correlations then you could trade up to 4 pairs comprising the majors at the same time without having a single currency overlapping, though you could potentially still have some correlation risk per my comment above. If you're not planning on holding several positions at a time, though, it doesn't matter as much.
 

Jackyfoxes

Newbie
8 0
Don't trade that many pairs, regardless of beta. Stick to ONE low vol pair, get to know it better than yourself for a couple of years. Only if you have too much money and been really successful over those years, start doing another one after you have done your studies, then you can start worrying about corr between those.

I assume you are a beginner, so doing pairs like AUDCAD and CADJPY, is most likely going to wipe you out unless you are taking direction and have fat pockets and heavy experience. Try sticking to USDCAD or AUDUSD (better with USDCAD if you are based in UK, easier hours to work with unless you are a man of the night).

Dealing in more pairs isn't really spreading risk, just wasting precious resources. Good luck.
 

NVP

Legendary member
36,444 1,819
hey there dude.......

I am currently on vacation till the weekend......will take a look on my return if you want ....

N
 

monkey180

Active member
145 0
Depends on what you were looking to do. If you want to avoid correlations then you could trade up to 4 pairs comprising the majors at the same time without having a single currency overlapping, though you could potentially still have some correlation risk per my comment above. If you're not planning on holding several positions at a time, though, it doesn't matter as much.
Hi there,

Could you clarify those pairs please.

Thanks
 

counter_violent

Legendary member
9,425 2,383
Hi there,

Could you clarify those pairs please.

Thanks
Any 4 combinations of these, using each currency once.

USD JPY GBP EUR CHF AUD NZD CAD

The first 5 are known as Majors and the remaining 3 as Minors or Commodity Currencies