Reasonably uncorrelated basket trading

Hello,

As we know certain currency pairs are correlated to one another. Thus, placing 2 trades based upon 2 signals of 2 pairs that have a high correlation isnt mitigating risk. What is your recommended "basket" of reasonably uncorrelated pairs, explanations as to why are welcome.

Thanks,
R

I don't basket trade as such. I simply look to trade negatively correlated currencies, i.e. the strongest against the weakest. I wrote this indicator to plot relative currency strength. Looking at the D1 plot (attached screenshot), JPY and USD are rising (strong), while NZD, CAD and CHF are falling (weak). This simultaneously determines the longer term trend, and therefore the direction of my trades.

Having decided upon which pairs to trade, I also look for confirmation in some momentum candles (pinbars, outside bars, engulfing bodies, etc), and for bounces off, or breakouts through, key S/R levels.

I've been interested in some time in trading pairs that are correlated. Mean reversion trading, in other words. It's a fascinating concept and one that's been used for years in the stock market. I'm not sure what the purpose of seeking poorly correlated (as opposed to negatively correlated) currency pairs is, unless you're just looking for diversification.

Great indicator, BTW. That may be the missing link in finding the pair correlations I'm seeking.

I think this is a good question. Anyone with more experience have an opinion?

So your basically just trading with the trend....?

Yes. However, a pair that pits a strong currency against a weak currency results - on average - in longer, cleaner trends. Conversely, the pairs of positively correlated currencies tend to move sideways more often; their charts tend to have lots of overlapping candles with long wicks.

More info here.

CURRENCY ONCE SET
=====================
eurusd
audcad
gbpchf
nzdjpy

eurgbp
nzdusd
audchf
cadjpy

eurnzd
gbpcad
audusd
chfjpy

usdcad
eurchf
audnzd
gpyjpy

gpbusd
eurcad
nzdchf
audjpy

usdchf
euraud
gbpcad
nzdjpy



I was looking for them myself just decided to share some I could assemble.