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Is it good to trade multiple pairs?

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Apr 14, 2014 09:48 pm
#1
illiterate User

Posts: 561
Member since: 21/04/2011

Usually new traders start with Eur/Usd. But some of them want to diversify their investment into more pairs so that they can increase winning chances.

But does it really increase winning probability? Isnt it riskier?

Share your opinion.

https://www.fxstat.com/widget/link?t=medium&c=1&s=25892&o1=growth&o2=drawdown&o3=monthly&o4=equity

Apr 15, 2014 12:27 pm
4nt5 Translator

Posts: 84
Member since: 12/10/2013

I dont think it is riskier, in fact I'd say it can make trading safer depending on the pairs that you trade. Many people talk about a diversified portfolio, why? because should you have read EurUsd wrong at least there is a chance you got it right with another currency.

 

Also if you are trading Eur/Usd for example, and you also trade cable GBP/USD and say AUD/USD you can use this to correlate the strength of the currency (generally up or down compared to other instruments) and make a more accurate and infomred decision before committing to a trade.

Thats my 2 cents, im hoping i'm hoping this isnt just my subjective theory.  

[cool]

Apr 18, 2014 08:11 pm
illiterate User

Posts: 561
Member since: 21/04/2011

Originally posted by 4nt5

I dont think it is riskier, in fact I'd say it can make trading safer depending on the pairs that you trade. Many people talk about a diversified portfolio, why? because should you have read EurUsd wrong at least there is a chance you got it right with another currency.

Also if you are trading Eur/Usd for example, and you also trade cable GBP/USD and say AUD/USD you can use this to correlate the strength of the currency (generally up or down compared to other instruments) and make a more accurate and infomred decision before committing to a trade.

Thats my 2 cents, im hoping i'm hoping this isnt just my subjective theory.  

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got ur point :).. Of course diversifying ur portfolio definitely decreases risk. But isnt it difficult as more currencies you want to trade, more analysis you have to do. Also you will get less time to analyze a currency especially when u arent a full time trader.

https://www.fxstat.com/widget/link?t=medium&c=1&s=25892&o1=growth&o2=drawdown&o3=monthly&o4=equity

Apr 19, 2014 11:29 pm
4nt5 Translator

Posts: 84
Member since: 12/10/2013

im far from being a full time trader, however i think there is a lot less analysis than u think with correlation... obviously u use an anaylsis on the pair you are about to trade, but the other two pairs are just a reference as to whether the currency is also bullish/ bearish againts others too (context.)

PS. once you get the hang of it i suppose it also becomes semi-auto/automatically processed in your mind. 

Apr 21, 2014 09:46 pm
Champ User

Posts: 711
Member since: 17/05/2011

I am in favor of trading multiple pairs but so far I have not diverted attention to more than 3 pairs. Even though correlation analysis makes it much easier to trade on multiple pairs but correlation analysis itself is based on currency analysis which can go wrong which can yield higher loss. 

http://www.fxstat.com/widget/link?t=tiny&c=1&s=24959&o1=growth&o2=drawdown&o3=profitfactor

Apr 24, 2014 08:03 am
Jogi User

Posts: 685
Member since: 06/06/2011

By analyzing accounts here on fxstat, most of the traders are trading 1 to 3 currency pairs max. So it is obvious that only a few traders try more than 3 pairs. Most of the traders do not know correlation because correlation is something that cannot be easily learned. It is a complicated concept.

The bottom line is your comfort level defines how many pairs u can trade.

http://www.fxstat.com/widget/link?t=wide&c=1&s=26883&o1=growth&o2=drawdown&o3=monthly&o4=equity

Apr 25, 2014 08:33 pm
illiterate User

Posts: 561
Member since: 21/04/2011

Originally posted by 4nt5

im far from being a full time trader, however i think there is a lot less analysis than u think with correlation... obviously u use an anaylsis on the pair you are about to trade, but the other two pairs are just a reference as to whether the currency is also bullish/ bearish againts others too (context.)

PS. once you get the hang of it i suppose it also becomes semi-auto/automatically processed in your mind. 



Yea. Correlation is a powerfull technique. But it is not a simple technique as most traders think. For example if we use it as follows

1- Eur/Usd = UP

2- Usd/Jpy = Down

Conclusion will be Eur/Jpy = Down

But it doesnt help at all because you r making this decision on the base of an assumption that eur/usd and usd/jpy will continue to move in that direction. So this type of correlation is rarely benificial.

Another type of correlation is to correlate pairs one on one. For example some say that Eur/Usd and Usd/Chf are highly correlated pairs. That might be a benificial trade but such analysis require indepth knowledge of how correlation works.

https://www.fxstat.com/widget/link?t=medium&c=1&s=25892&o1=growth&o2=drawdown&o3=monthly&o4=equity

Apr 28, 2014 08:06 am

Posts: 2
Member since: 28/04/2014

In my Opinion, Multiple pairs use is not good, to me any one or two pairs good for trade. 

[cool]

May 03, 2014 06:20 am
Champ User

Posts: 711
Member since: 17/05/2011

Originally posted by umarbinbari

In my Opinion, Multiple pairs use is not good, to me any one or two pairs good for trade. 

<img alt=" />



It also depends on how much time you have. People only try to experiment when they have enough time to do so otherwise they stick with a few currency pairs. 

What about you? r u a full time trader or part time trader?

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May 07, 2014 02:28 pm
ironical User

Posts: 734
Member since: 22/04/2011

In my opinion, diversification of investment is necessary to minimize risk. But it is only valid if your investment is diversified in assets that you know has high probability of generating income. So it doesnt depend on number of pairs, it only depends how many pairs can you trade comfortably.

The good or ill of a man lies within his own will. – Epictetus

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