Do you trade different pairs w/ 1 currency in common, at the same time?

For example, do you ever trade EUR/USD and NZD/USD at the same time, or CAD/USD and CAD/JPY at the same time?

Since they have 1 currency in common, there may be some correlation. But sometimes it's a strong correlation, other times it's weak. So I don't know if I should trade different pairs with 1 currency in common at the same time, since I may be exposing myself too much to a currency, or nullifying the profit on another one (if I go long on EUR/USD and USD/JPY for example).

I only trade daily/weekly, but this question goes to everyone, since there's also this problem in intra-day trading.

Hello Jasus,

eu and uchf

Yes, all the time!

But then don't you usually end up losing the 2 trades, or winning them both? It's almost as making 1 trade with the double of the normal size.

http://en.wikipedia.org/wiki/Triangular_arbitrage

Not always. Infact I trade 4 pairs with USD and 3 with JPY and my testing/live trading shows trading all together is viable. I see at times USD pairs doing crap but yen pairs doing well..for example look at March and April 2012 on Daily charts (i trade dailies only), yen pairs were a lot more trending than USD pairs.

Also notice NU and AU in March and April especially, NU was really choppy where AU was not bad.

But you're right, drawdowns do come and because of more pairs its larger DD but I like the profit potential of all the pairs together as well. Just depends on your tolerance.

Sometimes I do it, but generally try to avoid it - i Just go for what appears to be the best pair.

Yesterday for example, I shorted USD/JPY and CHF/JPY. Those are quite strongly positevely correlated. I expected both to drop, but diversified my risk to a certain degree by not putting everything on one horse.

Another example was AUD/CAD and EUR/AUD, both short. Those have a week correlation. They also played out both.

However, Im not skilled in this area, just trying things out.

I actually prefer to trade correlated pairs (.50-.80ish), but avoid near perfect correlated ones like eurusd/usdchf which i find hazardous. Hit ratio% and RR% both benefit.

You can only benefit from that, without assuming more risk than wanted, if you make the trades 1/2 of the normal size on each one.

Maybe with 2 it's not a big deal, but there are times where I want to enter in 3 or 4 pairs with 1 currency in common, and there I usually enter in 2 with 1/2 the size or just in one.

I see that you are in europe.

In US, we lost the hedging (nedging) and has the ugly FIFO rule.

You wouldn't realize how valuable that corr. is!
Best Pip Wishes!

Umm aren't those 2 pairs now pegged to each other? Which makes it good for hedging but nothing else?