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Would you trade related pairs differently?

  • Post #1
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  • First Post: Nov 20, 2015 12:01pm Nov 20, 2015 12:01pm
  •  forex_fairy
  • | Joined Aug 2012 | Status: Member | 392 Posts
So let's try one currency say the USD. Try one pair say USDCAD and the other is the EURUSD.

As you know these 2 pairs will be affected whenever the USD rises or falls opposite of one another.

Let's say you watch the charts of the USDCAD and it shows that it is rising and you do the same for the EURUSD and it also shows the same thing. Would you long on both pairs because if the USDCAD rises the EURUSD will fall and not rise since the USD is rising.
  • Post #2
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  • Nov 20, 2015 1:08pm Nov 20, 2015 1:08pm
  •  Xela
  • | Membership Revoked | Joined Dec 2011 | 376 Posts
Quoting forex_fairy
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Let's say you watch the charts of the USDCAD and it shows that it is rising and you do the same for the EURUSD and it also shows the same thing. Would you long on both pairs
Ignored

You'd be paying two commissions instead of one, that way: if EUR/USD is rising and USD/CAD is also rising, and you want to trade them, you can enter a single long trade on EUR/CAD with exactly the same effect and lower dealing-costs. There's no point in buying and selling the USD at the same time.
  • Post #3
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  • Nov 20, 2015 3:32pm Nov 20, 2015 3:32pm
  •  roughtrader
  • Joined Jan 2011 | Status: Senior Trader | 1,475 Posts
another word for this is correlation, there are different strategies on this,
correlation always return to it's mean, the problem is that nobody knows when,

I would not go long on both pairs as you described,
if my trading method for example gives a buy signal on both pairs,
I then know that one of the trades will most likely be stopped out,
because I know that these 2 pairs go in oposit direction.
so I would then ofcourse decide to trade just one of them or none,
on the other hand, if I have 2 pairs that both go the same way,
I would decide to trade the pair I think is more volatile and will have a larger move.
and that have been showin that in the past, also depending on the current fundamental data
for that particular pair.
Bulls are stupid Animals!especially when Im short!
  • Post #4
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  • Nov 20, 2015 4:07pm Nov 20, 2015 4:07pm
  •  diceman555
  • Joined Jun 2009 | Status: Member | 5,511 Posts
Quoting forex_fairy
Disliked
So let's try one currency say the USD. Try one pair say USDCAD and the other is the EURUSD. As you know these 2 pairs will be affected whenever the USD rises or falls opposite of one another. Let's say you watch the charts of the USDCAD and it shows that it is rising and you do the same for the EURUSD and it also shows the same thing. Would you long on both pairs because if the USDCAD rises the EURUSD will fall and not rise since the USD is rising.
Ignored
if you study this,you will make money.not the correlation ,the markets flows and stalls
  • Post #5
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  • Last Post: Nov 20, 2015 7:27pm Nov 20, 2015 7:27pm
  •  skyway
  • Joined Sep 2013 | Status: Member | 1,209 Posts
If usdcad rise and eurusd fall, it may mean overall usd strength, or both cad and eur individually weaken while usd remains unchanged, or both usd strengthens and cad and eur weaken at the same time.

If usdcad rise and eurusd rise at the same time, it may mean overall usd strength while cad strength, if any, is less than usd strength and eur strengthens more in comparison to usd strength, or cad weakens and eur strengthens while usd remain unchanged.

There are more combination possibilities and the conditions are not static as their relative strength change over time.
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