Iâm fairly new to currency trading and have made only a few real money trades since opening my account. I donât risk more than 2% of my account balance in any trade but have now realized that the correlation between currency pairs can make this risky if I enter more than one position at a time. A few questions to the successful currency traders: 1. How often would you have more than one position in the currency market? Do you sometimes have 4 or more positions? 2. Which pairs do you suggest I trade if I want the least amount of correlation? Iâm focusing on and looking for entries in mainly EUR.USD, EUR.GBP, USD.JPY, USD.CAD. 3. Any other advice/tips with regards to currency correlation will be appreciated.
you would take a correlation with a common base currency. heres some results from a matrix of log returns for swiss,yen,eur,bp,cad against the usa dollar <pre> CORRCOEF: [[ 1. 0.44847333 0.80633053 0.46336373 0.20516644] [ 0.44847333 1. 0.04034948 -0.16400523 -0.29937865] [ 0.80633053 0.04034948 1. 0.64389181 0.45374127] [ 0.46336373 -0.16400523 0.64389181 1. 0.39423824] [ 0.20516644 -0.29937865 0.45374127 0.39423824 1. ]] EIGEN VALUE: [ 4.63666926e-05+0.j 4.33333082e-05+0.j 1.54370842e-06+0.j 6.93306274e-06+0.j 1.35429311e-05+0.j] EIGEN VECTOR: [[ 0.4339741 0.42353394 -0.64186535 0.45325716 -0.12186999] [-0.1260431 0.86032288 0.17747007 -0.35184203 0.29777381] [ 0.4888775 0.13804878 0.74139744 0.41392596 -0.14469437] [ 0.52666785 -0.02367543 -0.05354708 -0.69038911 -0.49249978] [ 0.52858243 -0.24666891 -0.0630539 -0.15097451 0.79560415]] </pre>